Entanglement

Geopolitics is becoming the center of the world and it is affecting the global economy. Yesterday, the U.S. decided to step into the Israel-Iran conflict under the premise that Iran was enriching too much uranium to be used only for non atomic bomb purposes. Although intelligence reports of Iran building the bomb have not confirmed that factually, the fear of them being too close to it, and Israel insistence, have drawn the U.S. into war. The words “regime change” are now all over the news. Perhaps that’s the real target. A few reflections: (1) the overall cost of yesterday’s attack is around $2Bn and it may not be an isolated one. (2) Iran will either retaliate or the theocratic regime will fall. Neither of them will be peaceful. (3) As you can see in the chart below, Iran accounts now for 13% of OPEC’s oil production, and some refineries have been attacked by Israel, which means some disruptions will occur, increasing the price of oil. Furthermore, there are rumors Iran can close or restrict the straight if Hormuz. (4) 90% of Iran oil production goes to China, making it 10% of China total oil imports. In summary, all these points beg the question: is this a strategic move by the U.S. to put indirect pressure on China in trade negotiations? Can it backfire and create a coalition between Russia, China and Iran? What are the long terms costs and effects of yesterdays attack? Can the U.S. be drawn into the Ukraine conflict as well? Aside from the humanitarian costs, can the US afford another military conflict?

Want to know more? You can find all our posts at https://www.myfundamental.net/insights

#iamfundamental #soyfundamental #wealthmanagement #familyoffice #financialadvisor #financialplanning

#policymistake #ratecut #stagflation