Special Alert – The Next Big Thing

Posted by Peter Grandich

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Special Alert – The Next Big Thing

It’s often said that markets hate uncertainty. That’s true, but the key to keeping your head above water is to anticipate the unanticipated. While the worldwide economic crisis is front and center one should be asking, “What’s the next big thing that can greatly impact the markets.”

I believe it’s not a question of if, but when Israel attacks Iran. Such an attack would become headline news and greatly impact markets worldwide. My belief as a Christian that we could be in “End Times” plays no role in this assessment. (There are Christians supporting Israel in the belief this can somehow accelerate or induce end times). I’m truly looking at this through secular glasses and as someone who has spent 25 years away from the pack on Wall Street.

The Middle East has been front and center since biblical times. Religious or not, you must realize how Jews have found themselves smack in the middle of many of the most important times in history. Despite being a Christian, I’m the son of a Jewish mother, so Jewish tradition says I’m still a Jew. Since my Lord and Savior was a Jew and His Father has made the Jews his chosen people, this commentary is indeed being written by someone who sympathizes with their historical plight. But again, I pen this article not as a sympathizer but as a market strategist who happens to see them in the middle of the next big event that can impact the financial markets.

So why do I believe it’s a question of when, not if?

Newly-elected Israeli Prime Minister Benjamin Netanyahu says he will present his new government to parliament tomorrow. Based on media reports, it’s expected to be a so-called “hard-line” coalition. Key members of this coalition have been calling for radical changes to the perceived “dovish” ways Israel has been going in recent years. Prime Minister Netanyahu, a very polished speaker who has spent a lot of time in front of the U.S. media (and is very well liked among Conservatives), has openly stated on numerous occasions that Israel can’t allow Iran to go nuclear. I have no doubt that this is not posturing on his part but a deep conviction.

Make no mistake about it: the people of Israel are divided on this potential development. We also must be keenly aware that such an attack will almost certainly have no open political support and be publicly condemned worldwide. But a part of this criticism will be fluff as many in the world, including many Arab states, would like nothing better than to see Iran’s President Mahmoud Ahmadinejad and his regime disappear. But they can’t risk the outrage that’s certainly to be heard from the Muslim world and the liberal community.

My speculation after watching, reading and hearing Prime Minister Netanyahu these last few years is he will do all he can to see Iran stopped in its quest to become a nuclear power. He will not back down no matter how much political fallout from around the world develops. But to expect him to act next week, next month or maybe in just several months, remains an open question.

Knowing the United States has been its biggest ally, he will need to do a very good balancing act, especially since the Obama administration has taken a whole new tack towards Iran versus the previous administration. While we’ll certainly hear a lot of public debate about this, I believe Israel will first try to obtain a real sense of where the Obama administration will fall after the watershed event. But regardless of what they conclude, I remain convinced they will attack.

So what are the potential financial outcomes of such an attack? The no-brainer is oil goes to a significant higher level and keeps much of whatever that premium becomes. Financial markets are almost certain to react to the downside, but to what extent the physical and political damage occurs should go a long way in determining how low they go and for how long. Gold is also an expected benefactor.

I don’t take any pride in looking for destruction and loss of lives but my job is to deal with any and all potential factors that can impact markets. This plight won’t be the only hotbed area that can impact markets. I think Pakistan is fast becoming a country losing central control and, since it’s already a nuclear power, could only add to expected Iran/Israel conflict.

The Obama administration is changing both the tone and language on how it speaks about terrorism, enemies, etc. You need to know i think this is a big mistake. Many years ago, a man who would become President made a speech that IMHO, was bang on then and bang on now. Liberals are best not to watch.

“Some people like the Jews, and some do not.  But no thoughtful man can deny the fact that they are, beyond any question, the most formidable and the most remarkable race which has appeared in the world.”

– Winston Churchill
Prime Minister of Great Britain

…..article written by Peter Grandich. On November 3, 2007 at the MoneyTalks Survival Conference, Peter Grandich of the Grandich Letter warned that “an unprecedented economic tsunami will hit American beginning in 2008”.   Peter advised publicly to short the US market two days from the top in October, 2007 and stayed short until the last week of October, 2008. He began to buy stocks in March 7th,  2009.
….go HERE to visit Peter’s Website.