Israel-Hamas: An Update of the Three Ramification Pillars
In The WOTE Report last weekend I framed the Israel-Hamas situation as having the following three ramification pillars (see exhibits below for detail):
All-out war in the Middle East
Global political upheaval
The US has lost control of geopolitics
In this post I want to briefly update my thoughts on each pillar. Events on the ground are moving quite rapidly, especially through the lens of cross-asset market movements, and I find it helpful for clarity and progression of thought to document in real time, no matter how brief.
Ramification #1: All-out war in the Middle East
I will have a more detailed summation of the various pieces of evidence I’ve gathered this week on this front, but suffice it to say the risk of all-out war is rising. From a financial market perspective the most efficient way to track this risk is through the lens of oil and gold price movements, both have which have moved decisively through the highs of last Friday, which prompted the panicked hedging activity seen in the VOL complex heading into the weekend.
Ramification #2: Global political upheaval
I actually think this risk is receding. The #FreePalestine movement has elicited substantial blow-back across the political spectrum, so I think there is a decent chance this won’t be a lingering issue.
Ramification #3: The US has lost control of geopolitics
Unfortunately this appears to becoming more clear by the day, and it will be the subject of a more detailed post today or tomorrow outlining the variety of evidence pointing to the US-led world order grossly underestimating just what exactly Israel needs to do here, and what the impact of that will be on the geopolitical world order.