I spoke with an extremely credible source (ex-CIA executive that was present at Camp David when peaceful negotiations were brokered between Egypt and Israel). He has been following this for over 20 years and with the cops switching sides and fighting with the locals, he believes this is the start of a major disruption in the markets and global economy. I do realize he is an expert in other areas than finance, but I wanted to see what this board thinks. America has a lot of skin in this game. I am considering tilting my investments towards bonds for a couple of months until this rides out. Not too much. Here is the best summary of the situation I have found so far (top post by Sargon)… http://www.reddit.com/r/AskReddit/comments/famjz/can_someone_explain_the_egypt_situation_to_me_and/
You can expect anything that starts in Egypt to spread out to the rest of the Middle-East. Think back in 1952 when the Egyptian monarchy was overthrown by the Army and then Naser pushed for change in all Arab countries and Sub-Saharan Africa ( French out of the West, Iraqi/Syrian revolution on the East and everywhere else in between). This is not an Islamic revolution, Egypt is not Iran. If and when that old fart, Mubarak finally gives in I’m personally hoping for a model similar to Turkey.
Definitely not a good sign. But bonds? Treasurys over the next few months probably aren’t a horrible idea, but if the crap hits the fan then you may as well buy some gold/silver and profit from it.
I think the military being called in tonight (US time) will be the deciding factor. They’re the ones who will decide by picking who they will protect. A lot of opportunities can still be had with non-global US companies, small-mid cap. Probably a good time to have cash waiting for an opportunity
On a short-term basis, the market seems valued richly. So people are looking for reasons to sell. This Egypt thing fits the bill. Over the long-term, it ain’t matter. If the unrest is in an oil rich middle east country, it will have a bigger impact. Short-term noises.
My feeling is that the markets will bet that the markets will bet that the markets will bet on oil. I don’t think there will be a Middle-East-wide Jasmin revolution. But I think that we will see *some unrest* spreading in the Middle in the coming months (which could also spread to Iran, where there still is much tension), which in turn will make people exagerate the whole situation. As I currently see oil as a good investment anyways based on global factors, this unrest is something on top which makes an already good investment a potentially very good short term investment.
Viceroy Wrote: ------------------------------------------------------- > My feeling is that the markets will bet that the > markets will bet that the markets will bet on > oil. > > I don’t think there will be a Middle-East-wide > Jasmin revolution. > But I think that we will see *some unrest* > spreading in the Middle in the coming months > (which could also spread to Iran, where there > still is much tension), which in turn will make > people exagerate the whole situation. > > As I currently see oil as a good investment > anyways based on global factors, this unrest is > something on top which makes an already good > investment a potentially very good short term > investment. Agree
I agree with Alphaseeker that markets are highly valued and this could just be the trigger for a near term bear market. I don’t think the tension will spread to Iran. I feel Iran’s leaders would view the current uprising as the same type of uprising that brought them to power in 79. I think the US will be wary of withdrawing support from the Egyptian regime as both Mubarak and the US will think of the Iranian example. Or I suppose what could happen is that ElBaradei could be appointed leader with a US nod and assumption that he would continue Egypt’s foreign policies unchanged.
Political turbulence in Egypt and Global markets… is there any correlation really? Are they defaulting on their debt? No Are they starting any war? No Are they becoming communists? No Are they stopping business or trade? Not really My 0.02$!
Bernanke Wrote: ------------------------------------------------------- > Political turbulence in Egypt and Global > markets… is there any correlation really? > Are they defaulting on their debt? No > Are they starting any war? No > Are they becoming communists? No > Are they stopping business or trade? Not really > > My 0.02$! On your second point, it’s No for now. Let’s see what regime takes over. The cold peace with Israel could be threatened.
Bernanke Wrote: ------------------------------------------------------- > Political turbulence in Egypt and Global > markets… is there any correlation really? > Are they defaulting on their debt? No > Are they starting any war? No > Are they becoming communists? No > Are they stopping business or trade? Not really > > My 0.02$! i agree with bernie ( can i call you this i feel your are doing a wonderful job btw ) but it is worth noting that most of the historical major conflicts ( ww1 for example ) began with seemingly innocous events…the key is lets see how it develops and where else this will spread…lets not forget ivory coast in this also
> Are they stopping business or trade? Not really Except if the suez closes.
pimpineasy Wrote: ------------------------------------------------------- Yups!
Sweep the Leg Wrote: ------------------------------------------------------- > > Are they stopping business or trade? Not really > > Except if the suez closes. They can also kill the submarine cable which goes through there, would stop Asia’s connectivity with Europe. But, why would they’ll close suez, or do any other stupid stuff, from what all I’ve read, they aren’t taliban, it’s just the power struggle. But yes, regime like Iran (puppet govt. controlled by clerics) might have different consequences, but the situations in which Iran adopted such form of govt were pretty different from situations in Egypt, there’s no war involved!
In my opinion the biggest fallout from this is going to be strategic rather than financial, Egypt is so crucial to US foreign policy in the middle east region that any recalibration of Egypt’s foreign policies would totally disrupt american policy imo. So I think Egypt will only be replaced by a western friendly leader I think. Financially I think we will only see problems if an Iranian style regime takes power, don’t see that happening though.
I agree with the Leg, unless the revolution affects any one of the oil producing countries(Libya/Iran/Saudi), there is little chance of any material impact to the global economy. And chances of something like this happening in Iran and Saudi are slim at the moment for different reasons, Libya on the other hand could be called a toss up. And as far as the peace with Israel is concerned, Egypt, does not have the kind of military that can pose any serious threat to a nuke capable Isarel. Again only my $0.02, but feel that markets have overreacted, this might be the time to buy some otherwise expensive stocks.
Palantir Wrote: ------------------------------------------------------- > In my opinion the biggest fallout from this is > going to be strategic rather than financial, Egypt > is so crucial to US foreign policy in the middle > east region that any recalibration of Egypt’s > foreign policies would totally disrupt american > policy imo. +1 In any case, whichever form new govt takes, Hillary has lot of stuff to do!
Well, there are lots of uncertainties here. 1) Will the regime change at all? (answer, the regime will change, though it is not 100% guaranteed that Mubarak will be pushed from power. It is 90% probable that he’s ousted, I’d say, but not guaranteed; if he does stay, that would certainly be with reduced powers, and the reason that he might still stay is if the opposition cannot come to an agreement on who/how to govern, and therefore he might stay on with reduced powers to provide some semblance of continuity whilst there is some transition to another governing system and/or coalition.). 2) Assuming Mubarak is out, will the resulting regime be religious or secular? If religious, what will be the relationship between the Muslim Brotherhood and Al Qaeda. My sense is that the MB and AQ are organizational rivals; MB being more nationalist in orientation. 3) Will the resulting regime be anti-Israel, thus increasing the chance of conventional and nuclear war in the entire region. 4) Will the resulting regime be anti-Western and/or anti-American, in which case control of Suez will be a major issue. 5) Will the resulting regime be able to govern at all? So far, the protesters are united against Mubarak, but not necessarily united for anything. 6) Will there be reprisals against the very wealthy, stimulating capital flight and possibly civil war? 7) If there is civil war and/or inability to govern, does this provide Al Qaeda a geographically juicy failed-state zone in which to operate? 8) Will a successful revolution prompt revolutions in other Arab states, in particular Saudi Arabia? This is more likely if the regime that emerges is religious in nature. Egypt has generally been the intellectual center of the Arab world, certainly over the last 100 years. 9) Will these events drag NATO and/or the UN into peacekeeping operations, essentially adding another war to western budgets, as well as further straining Arab-Western relations. 10) To what extent does this strengthen the hand of Iran. Iran is not Arab, and so is a bit of an outsider to the Arab world; on the other hand, Iran might support specific factions in Egypt to a) keep the US and the West occupied with Egypt and not Iran, and b) build a community of more theocratic regimes. Given that all of these things touch on the hotbutton issues of oil accessibility as well as military conflict, markets almost certainly have to discount prices to reflect uncertainties. Gold, oil, Treasurys and alternative energy companies seem to be logical bets here.
^ “The only comfort, as we watch Egyptians struggle for their country’s future, is that some choices aren’t America’s to make.” http://www.nytimes.com/2011/01/31/opinion/31douthat.html?ref=opinion