What the market is ignoring now...

[Cardboard]

IMO, a strike on Iran by Israel in the near future is approaching 100% probability. There is another round of negotiation coming up on November 20, but again IMO, the new president is just trying to gain time.

 

He did it in 2003 so why would it be different this time? Do you really believe that sanctions which hurt the small people of Iran are changing the mind of the regime and their hate for Israel and the West? From what I have read there are only 8 countries that enrich uranium and dozens that produce energy from it. What is their purpose to enrich or to develop that capability? They are so close now that unless they totally give up on the program, they are still advancing and that has to be for one purpose only.

 

This article/interview from the former Israeli defense-intelligence is quite informative.

 

http://www.newrepublic.com/article/115313/amos-yadlin-iran-strike-why-israel-needs-act-soon

 

Of course, oil would rally hard under such scenario. It may back down afterwards since global demand could drop with economies hardly able to absorb such shock. One thing is certain, volatility and fear would rise dramatically from today's level. The market hates uncertainty and that is about as bad as it gets since consequences and actions that would then be taken are unknown.

 

Cardboard

[bmichaud]

Very interesting. I don't pay near enough attention to the Iran situation. With market sentiment at extremely optimistic levels right now, I think there is pretty significant vulnerability to an event like this. Though I would think various geopolitical safe haven markets would have this sniffed out by now if there is such a high prob in the relatively near term.

 

It is amazing how difficult it is to think of a risk that might upset the market right now. In early 2012, the market would have been beside itself at the lack of progress on an EU bank union, low EU inflation and lack of certainty surrounding the legality of the OMT program. But those things no longer matter - Ms. Yellen will come to the rescue no matter what happens.

[CorpRaider]

You probably don't pay attention because the israelis have been screaming that iran would have a bomb within 6 months for about 6 years now.  Seems to me more likely now than at any point since the shah that Iran MIGHT rejoin the world community.  That is not to say it is at all likely.  If the sunnis, israelis and shiites are determined to have more proxy wars and maybe even some skirmishes I just hope the US gives them wide berth.  I hope there is enough energy in Canada, Mexico, Brazil, the US and Russia to just ignore them and leave them to fight out who is the most favored by the god of abraham.

[Guest wellmont]

if anything was imminent the market would be sniffing it out. not on the radar. in fact the market seems to be sniffing out a softening of the relationship of "world vs Iran".

[JBird]

if anything was imminent the market would be sniffing it out.

 

I bet you could think of a lot of examples where the market didn't sniff out something imminent.

[bmichaud]

There is always some type of leading indicator. For example....SHLD went from $37 to $60 long before the LE spin was announced, thus once the spin was imminent, the market already had it sniffed out. Of course 3 months ago the market didn't have it sniffed out - which I'm assuming is what ur talking about - but 3 months ago it wasn't "imminent". 

 

Gold rallied long before the true reasons for its multi year rally became known - financial crisis, low growth, deleveraging and money printing - thus by the time those events began to materialize, it was already in the price of gold.

 

So perhaps Cardboard is right, but is far ahead of the market, and all of the assets that would rally in that scenario have yet to begin sniffing it out.

 

At least that's how I look at it.

[turar]

In the linked article Yadlin says that if Israel strikes Iranian nuclear facility, Iranians will react rationally and not commit a full-scale retaliation, because the third round of counter-retaliation will be huge. Well, in that case, why would Iranians not act even more rationally should they possess a bomb? His arguments that MAD will not work are not serious -- it's easy enough to setup those de-escalators that he's talking about. The bottom line is, if Iran already had a bomb, Israel wouldn't even be talking about striking Iranian sovereign territory, and the balance in the region would be set, similar to India-Pakistan.

 

Iranian leadership doesn't hate the West, but they do want some respect. As Yadlin said, they've learned from North Korea, that once you have a bomb, nobody will touch you. They also learned from Iraq, that if you don't get the bomb soon enough, you are fair game.

[CorpRaider]

I don't know that it matters what the typical iranian on the street thinks.  It may matter that the supreme leader has watched a lot of other command and control structures crumble recently and he might need to weigh the possibility something like that will happen to him partially as a result of the sanctions versus the need for a nuke. 

[Guest wellmont]

if anything was imminent the market would be sniffing it out.

 

I bet you could think of a lot of examples where the market didn't sniff out something imminent.

 

depends on your definition of imminent. But this is specific. and everything I am reading indicates a softening and conciliation on Iran by other global players. And of course that scares Israel. will it scare them enough to take preemptive illegal action against another Nation, and then suffer the consequences of that action? I don't think they'd be that irrational. And the market sees no signs of this.

[Cardboard]

In terms of the market sniffing it out, gold and Brent oil remain stubbornly high IMO and that has something to do with it. Although, there has been no recent spike since the timing is so unknown. I think some of you are now giving way too much credit to Mr. Market. Many takeovers are not even detected despite insiders knowledge.

 

Regarding Israel acting quitely on its own, it has done it twice before against a nuclear threat and many times against conventional targets in Syria. I would not underestimate their will.

 

Finally MAD does not work here. Israel does not have the capability to exterminate all its enemies if it is attacked. As is mentioned in the article, it is a "one" bomb country. Weather it is carried out by Iran, Hezbollah or some other group, the consequences to them are fatal while most of its enemies would survive. Other global players negotiating don't have at all a similar threat over their head.

 

Cardboard

[Palantir]

I'm heavily skeptical Israel has the ability to strike Iran. Think about it, where would they strike? Irans nuclear facilities are spread throughout the country, and in some cases in difficult to reach locations. To do real damage, they'd need to carry out multiple airstrikes over hostile airspace far away from home soil, and I don't believe they can.

[xtreeq]

I'm heavily skeptical Israel has the ability to strike Iran. Think about it, where would they strike? Irans nuclear facilities are spread throughout the country, and in some cases in difficult to reach locations. To do real damage, they'd need to carry out multiple airstrikes over hostile airspace far away from home soil, and I don't believe they can.

 

As an Israeli I can tell you that there will be NO strike on Iran without US approval. One of the reasons is that we need US consent to use some of the hardware that would be needed for such a strike.

[Cardboard]

What a deal... for Iran!

 

They got 6 months free of potential attacks from the U.S., billions in cash and they get to keep all their facilities. In return, they only need to stop at a certain level of enrichment which will be controlled by U.N. inspectors. ::)

 

You gotta be kidding me. Do you guys remember how many U.N. inspectors were rolling around Iraq before the U.S. invasion trying to hunt down weapons of mass destruction? So there were dozens of people on the ground and despite that, the U.S. intelligence could not even figure out if they had or not WMD's. And now, we are going to rely on the same people to control a country about 3 times as large not to enrich past a certain point while we likely don't even know about all their facilities.

 

This is naivety on a scale that I have rarely seen before. Israel is now cornered, so is Saudi Arabia. Things will now get much worse before they get better. This deal is as bad as the non-aggression treaty between Nazi Germany and the Soviet Union and appears very similar in terms of Iran gaining time to organize.

 

As I mentioned before, there is no need for a country to enrich. The stuff is already available to produce energy in commercial form. Gaining that knowledge and capacity can only be for one purpose.

 

Cardboard

[ERICOPOLY]

Gaining that knowledge and capacity can only be for one purpose.

 

Cardboard

 

On the positive side, if Iran develops nukes the US won't start a war with Iran.

 

We only bomb/invade the countries that don't have nukes. 

 

[Palantir]

How do you know US intelligence could not figure out whether Iraq had nukes or not? Furthermore, if Iran does get organized and more powerful, so what? I'd be happy with Iran balancing out KSA.

[LC]

How do you know US intelligence could not figure out whether Iraq had nukes or not? Furthermore, if Iran does get organized and more powerful, so what? I'd be happy with Iran balancing out KSA.

 

Does the US intelligence even know if the US has nukes?

 

Cheap shot NSA, sorry! :)

[Guest wellmont]

What a deal... for Iran!

 

They got 6 months free of potential attacks from the U.S., billions in cash and they get to keep all their facilities. In return, they only need to stop at a certain level of enrichment which will be controlled by U.N. inspectors. ::)

 

You gotta be kidding me. Do you guys remember how many U.N. inspectors were rolling around Iraq before the U.S. invasion trying to hunt down weapons of mass destruction? So there were dozens of people on the ground and despite that, the U.S. intelligence could not even figure out if they had or not WMD's. And now, we are going to rely on the same people to control a country about 3 times as large not to enrich past a certain point while we likely don't even know about all their facilities.

 

This is naivety on a scale that I have rarely seen before. Israel is now cornered, so is Saudi Arabia. Things will now get much worse before they get better. This deal is as bad as the non-aggression treaty between Nazi Germany and the Soviet Union and appears very similar in terms of Iran gaining time to organize.

 

As I mentioned before, there is no need for a country to enrich. The stuff is already available to produce energy in commercial form. Gaining that knowledge and capacity can only be for one purpose.

 

Cardboard

 

be that as it may, it takes your original scenario completely off the table for the markets. the markets had this deal sniffed out.

[Cardboard]

You are completely wrong Wellmont! It takes the scenario front and center.

 

The only way to avoid confrontation was to force Iran to completely abandon its enrichment program. This does none of it and Iran has claimed publically that this deal recognizes their right to enrich. This is also the same group or right before the meeting that was accusing Israel of bombing their embassy in Lebanon. I had never heard about Israelite suicide bombers. Did you?

 

Regarding the markets, oil did not collapse today and gold actually finished up. So much for your sniffing market!

 

Cardboard

[turar]

When did a country with nuclear weapons ever attack another country with nuclear weapons?

When did a country without nuclear weapons ever attack a country with nuclear weapons?

When was the last time Iran attacked another country?

[JBird]

When did a country with nuclear weapons ever attack another country with nuclear weapons?

When did a country without nuclear weapons ever attack a country with nuclear weapons?

When was the last time Iran attacked another country?

 

Can you explain your point?

[turar]

Can you explain your point?

My point is that no end of the world will happen if Iran goes nuclear. In fact, it will be better for the region's stability.

[Max Alpha]

When did a country with nuclear weapons ever attack another country with nuclear weapons?

When did a country without nuclear weapons ever attack a country with nuclear weapons?

When was the last time Iran attacked another country?

 

Can you explain your point?

 

I think the suggestion is that if Iran do gain nuclear weapons it is a non-event because they aren't actually going to use them, and once they have them, no one is going to attack them.

 

So basically the only chance of an armed conflict is prior to them achieving nuclear capabilities, after they do, they just become a more mature power and undermine the existing power brokers in the region (hence why no one wants it to happen).

 

[no_free_lunch]

Once they have the bomb what's to stop them from invading another country?  I mean really, if they do it is the US really going to start a war with a nuclear opponent?  Look at the games North Korea is playing and how they have gotten away with it.  I don't think 50 years of a handful of countries with the bomb is a rock-solid argument that nobody, ever, guaranteed 100% will use them or threaten to use them or prevent them from falling into the hands of some rogue actor that is willing to use them.  I just don't buy the argument.  I remember when analysts were saying that housing prices only ever fall regionally, a nation-wide pullback in housing prices wasn't even modeled.  They were wrong, how do you know you're not wrong?  There is not enough data.

 

[Max Alpha]

Once they have the bomb what's to stop them from invading another country?  I mean really, if they do it is the US really going to start a war with a nuclear opponent?  Look at the games North Korea is playing and how they have gotten away with it.  I don't think 50 years of a handful of countries with the bomb is a rock-solid argument that nobody, ever, guaranteed 100% will use them or threaten to use them or prevent them from falling into the hands of some rogue actor that is willing to use them.  I just don't buy the argument.  I remember when analysts were saying that housing prices only ever fall regionally, a nation-wide pullback in housing prices wasn't even modeled.  They were wrong, how do you know you're not wrong?  There is not enough data.

 

Why does this argument only apply to one potential nuclear power and not others? What is stopping Israel invading weaker countries in a meaningful way?

 

The use of nuclear weapons brings with it assured destruction for any marginal power / questionable regime. Iran don't have the conventional military power to mount an invasion of significance, and the use of nuclear weapons would see the end of their government and destruction of their cities and industries. Israel could wipe a nuclear Iran from the face of the earth if they were provoked in any way.

 

Iran isn't North Korea.

 

I won't lose any sleep if they gain nuclear weapons.

 

 

 

[no_free_lunch]

I don't want to get too much into politics here.  It is really not a question of other countries having a right to the bomb and others not.  You can't roll back the clock so what' done is done.  I am just saying that if you let everyone who wants to enrich uranium do so then at some point somebody will do something stupid.  It might be intentional, it might be an accident but the consequences are too great.  We have already had accidents with nuclear power in the US, Ukraine, Japan.  We have had close-calls with nuclear weapons in the 60's.  If you multiply this out and end up with dozens of countries with it, at some point a mistake will be made.