So what’s everyone’s opinion on the current situation in Israel and how it is going to expand/continue? How will this affect the markets in the US?
I’m sitting on some significant gains this year - and I’d like a few opinions on whether or not to harvest those gains or ride it out? It is a fairly significant amount of money, so the tax implications are enough to be painful.
I’d appreciate any feedback/discussion.
Thanks in advance!!
That is an ever-present danger regardless of any international hostilities.
I actually think that risk is MORE LIKELY when the world is relatively at peace and things are quiet. That is when we are most likely to let down our guard and ignore risks. We become hyperaware when the perceived risks are higher.
Posit: Israel is more on guard against another attack today than they were a month ago.
I read an interesting statistic on terrorists apprehended at the US/Mexico border in the past 3 years. Check this out: “In fiscal year 2023, Border Patrol reported apprehending 151 migrants with positive terrorism watch-list matches who entered the U.S. illegally along the southern border, an all-time high for the region that eclipsed the previous record of 98 set in fiscal year 2022, government figures show. In fiscal year 2021, the agency reported just 15 such apprehensions.”
So the real question is: “How many came across the border that they do not know about?”
Muslims being knocked around over there may “inspire” more attacks here. The US has been pretty quiet since the major operations in Iraq were wound down. Unlike 2016, we were not hearing a lot of posturing about “Muslim bans”. Most of the attention has been on Asians, Hispanics, and gays. But the US trying too hard to tip the scales in favor of Israel could get people wound up again.
It helps that the U.S. is now a net exporter of petroleum, and no longer an importer. So disruptions in the global oil markets don’t have quite as much impact as they did back in the day - also making it far less likely that OPEC would try to repeat the 1973 oil embargo.
While, last I knew, US law prohibited exporting crude, there is no limit on exports of refined products. If the price of gas or diesel soared anywhere else, due to war with Iran, or an embargo, or mining of the Persian Gulf, USian fuel would be exported to where it can find the highest price, meaning the price in the US would soar also.
Sure, but the impact of that would be much more muted than in 1973. The U.S. is now the world’s largest producer of oil, having passed Saudi Arabia. And we’re a net exporter of petroleum products. Which is beneficial to the U.S. in three ways.
First, rising prices aren’t as much of an unalloyed negative as they used to be - rather than foreign producers benefiting from the higher prices (and our import costs being driven up), domestic producers will reap those gains.
Second, we’re no longer an easy or obvious target for an embargo - a conscious decision not to export to the U.S. specifically as an instrument of Gulf State foreign policy. We just don’t import much at all from there - or OPEC generally - any more. If they wanted to seriously affect world oil and fuel prices through an embargo, they’d have to target it at China and India (who are now their main customers). That just doesn’t work that well - especially in this specific context, since neither is likely to be a strong supporter of Israel.
And finally, we now have the capacity to respond to an external oil shock. If OPEC oil gets locked in - either by choice or by conflict - then we can step up and be the swing producer to provide additional global capacity.
None of this makes us immune from big swings in oil prices, but it puts us in a much better position than in 1973.
Back then the leader of OPEC was actively in favor of Palestine and convinced the ARAB members of OPEC (AOPEC) to embargo oil which is what “helped deepen the 74 recession.” Now the House of Saud prefers peace with Israel.