Ad Hoc Commentary – Is US-Russia going to war in Syria?

For most of the year, the top 3 political concerns that were driving Mr Market were the upcoming elections:

1. US presidential elections (Nov 2016)

2. French presidential elections (May 2017)

3. German federal election (Oct 2017)

 

For instance, the last time the SPX sold off was on Friday, Sep 9. That was the Friday that Clinton was supposedly diagnosed with pneumonia. Yes, the news was made public after the weekend. Was it coincidence? Yours truly believes not. This brings also another interesting observation, the majority seems to believe a Trump presidency is bad for SPX. This means that the SPX probable 10%-20% sell-off on a Trump presidency is going to be the buy signal for yours truly.

 

In any case, all three upcoming elections are concerning because there is a high likelihood of Brexit-like outcomes. Brexit is probably the first meaningful outcome of the growing “unrest” at the ballot-boxes, and there are likely many more to come in the coming months.

 

In the past 24 hours, Syria once again became the biggest political concern for the world. Yours truly mentioned before that for peace in our time, America should stay out of Syria. America didn’t and the world will suffer the consequences. That is probably why oil had been rallying. Big money had probably sensed that the war is in the air. The conflict in Syria is getting from bad to horrible.

 

“…The Russian government is ratcheting up warnings – on Twitter – to the U.S. government not to interfere with its military operations in Syria, even suggesting American aircraft could be targeted by its “air defense systems.”…”

“…The tweet comes after the U.S. and Russia suspended direct talks over Syria operations — and amid heightened tensions between the two countries over the bloody civil war in which Vladimir Putin’s forces are backing Bashar Assad while the U.S. tries to focus on taking out ISIS…”

http://www.foxnews.com/politics/2016/10/06/russia-posts-provocative-tweet-warning-us-on-syria-mocking-earnest.html

 

This could not come at a worse time for the US presidential elections. The main problem is that the establishment probably knows very well that Trump’s rhetoric is resonating well with the masses. As a consequence there is an increasing likelihood that the world will need to prepare for a Trump presidency. The key concern here is will the status quo take advantage of the Syrian situation for their own political gain in Washington? War with Russia is a paradigm shift from all previous wars because Russia is strong militarily. A school bully might come from a famished home that is struggling to put food on the table. But that does not mean he lacks the brawn, and the willingness to break some bones. Russia could very well fit into the profile of that proverbial school bully.

 

Coming back to Mr Markets, yours truly had been very impressed with the SPX’s ability to defy gravity. Yours truly had been missing out on the post-Brexit rally, but am not chasing this rally. The risk-reward probably does not justify it. One of my old friends used to say that the last 10% is for the late-comers. For the brave late-comers out there, all the best in the markets.

 

Good luck in the markets.