The Economy Guy

Stocks and bonds went sideways today – a battle between the bad economy and the war in the middle east.

The Dollar caught support from central bankers, and more is expected over the next 2 days.

Oil and gasoline went up on the scare of oil supplies in the middle east (see news below), and gold went up slightly for the same reason – scared of war.

In the news today….

Israel bombed Gaza (and is trying to wipe out Hamas) over the past 3 days.  Israel is amassing tanks and ground forces for a ground invasion of Gaza to finish the job.  This by itself is nothing much to worry about, as it is confined to a small quarter of Israel.

However, the thing to worry about is what will Iran do in this circumstance.  Right now, Iran is telling the entire Arab world to fight for the Palestinians.  Iran controls not only Hamas, but also the Hezbollah in Lebanon to the North of Israel.  Iran is also the surrogate puppet master of Syria.  Could this war spread to the North?  Possibly – and this is the thing to watch as far as future actions is concerned.

What does this mean to investments?  Wars are times when people flee to safety – think Treasury bonds, the right currency (I wonder what is the right currency today??), and Gold.  Oil is threatened by a belligerent Iran in the Straits of Hormuz – so oil prices should trend upward as long as this fighting goes on, and as long as Iran hasn’t played its hand.

Here is a list of things to watch for – signs of an escalation:

1. Hezbollah shooting rockets into Israel from the North
2. Syria amassing troops toward the Golan Heights
3. Iran trying to reinforce Hamas in the Gaza
4. Other Arab nations taking up the cause for the Palestinians.

Here are Today’s numbers:
Dow Jones 30 Industrial – 8484 (down 32 points)
10 Year Treasury Bond – 2.10% (down 0.04%)
Euro – $1.3980
Gold – $875 (up $4)
Oil – $40.02 (up $2.31)
Gasoline – $0.87 (up $0.03)