The terrorist attack in Israel rekindled the flames of a generational conflict and gave the markets something new to chew on.
The only real predictable reaction is that crude oil would be higher, and it was. November crude oil futures gapped higher Sunday night and coming into Friday morning had gained $4 per barrel on the week.
The stock indices and bond markets presented a more peaceful trading week coming off their lows from last week initially and trading sideways from there. There was volatility but not as much as one might have expected considering the newest Consumer Price Index numbers were released as well. CPI rose 0.4% last month which is below the 0.6% gain in August but above the 0.3% pace economists expected.
Lines already have been drawn in the conflict between Ukraine and Russia. Fortunately, the rest of the world has enough perspective to respect countering positions and actions that move out of the black and white into the gray area. NATO imposed sanctions against Russia have been circumvented by opportunistic nations in Asia and needy nations in Africa while NATO nations have supported Ukraine financially and militarily without getting involved in a direct conflict.
The new lines drawn over this latest conflict in Israel will look a lot like the old ones, but they will provide new opportunities for those looking to take advantage.
Neighboring Middle Eastern nations looking to settle old scores that will never be settled, and trade partners looking to get cozy with those same oil producing Middle East nations will both be on the prowl. Politics — same as it ever was.
The difference this go-round is the power players that are economically connected but differ politically have already had their relationships strained in recent years. The worry is that it might not take as much effort to tip over the bucket of chaos and have it spread out of control.
Fortunately, the market doesn’t seem to be pricing in such a scenario after the initial attack and response from Israel. Any country who stands to gain from taking advantage of the situation also has a lot to lose should they go too far.
Unfortunately, Hamas, a leading faction of Palestinians in the Gaza Strip, has nothing to lose as displayed by its actions. While one would hope that could change for the better in time, the main concern at the moment is keeping that attitude from spreading.
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Opinions are solely the writer’s. Derrick Hermesch is a commodity futures broker with Pinion. He can be reached at 785-338-9605. This is not a solicitation of any order to buy or sell nor does it provide any recommendations in regard to the market. Information contained herein is believed to be reliable but cannot be guaranteed as to its accuracy or completeness. Past performance is no guarantee of future results or profitability. Futures and options trading involve substantial risk of loss and is not suitable for all investors.