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Friday, June 24, 2022

Iran and Israel: Potential For Catastrophic War From The Middle East

It seems pretty clear that the drumbeats of war are looming in the Middle East. Strangely, the mainstream media seem to be ignoring it, and the financial markets act unaware.

That can only mean one thing. Get ready.

For starters, should war break out, it will likely be a major Black Swan event. Obviously, economies and financial markets hate Black Swans. That means more volatility to follow.

So, what’s happening in the Middle East that’s got me so worried?

Shadow War

Currently, there is a shadow war going on between Israel and Iran. A lot of things are happening beneath the surface, especially in the espionage realm. Some incidents were reported but received less attention than they should given the gravity of the situation.

Weekly Military Actions in Syria

For quite a long while, Israel and Iran have been conducting shadow operations against each other. Every week, I hear about Israeli air and missile strikes in Syria against Iranian interests. That in itself is quite extraordinary. One recently hit the civilian airport in Damascus, it made the news.

Normally, when a nation’s military violates the airspace of another and conducts strikes, it is as good as declaring war. If frantic diplomatic efforts are not carried out successfully, a broader shooting war will follow. That this isn’t driving major headlines is worrisome.

Consider what happens near Taiwan. Whenever the Chinese air-force nears the Air Defence Identification Zone (ADIZ) of Taiwan, the media screams about it. China does not have to violate the actual airspace of Taiwan for reporters to fret impending war.

Yet Israel’s weekly violation of Syrian airspace to conduct military airstrikes results in actual combat deaths. But you hardly hear any mention of it.

Cyberwar

There have been more than rumors and speculation of an active cyberwar between the two nations for quite a long while. As the New York Times recently reported,

Millions of ordinary people in Iran and Israel recently found themselves caught in the crossfire of a cyberwar between their countries. In Tehran, a dentist drove around for hours in search of gasoline, waiting in long lines at four gas stations only to come away empty.

In Tel Aviv, a well-known broadcaster panicked as the intimate details of his sex life, and those of hundreds of thousands of others stolen from an L.G.B.T.Q. dating site, were uploaded on social media.

For years, Israel and Iran have engaged in a covert war, by land, sea, air and computer, but the targets have usually been military or government related. Now, the cyberwar has widened to target civilians on a large scale.

Recently, as the Jerusalem Post reported, false rocket warning sirens were activated in Jerusalem and Eilat on June 19 and suspicion fell on Iranian hackers.

Assassinations and Sabotage in Iran 

In May, an Iranian colonel was assassinated on Iranian soil. This is not the first assassination allegedly conducted by Israel. The rumors and speculation of assassinations across Iran are spreading. For example, this poster was found in Iran:

Figure 1 Wahab Faramarzian, an Iranian Revolutionary Guard Corp air force officer, was killed in Maraghe. Source: Global Telegram

 

Also, a drone strike by an unknown perpetrator took place in Iran. As the New York Times reported,

A drone strike this week targeted a highly sensitive military site outside Tehran where Iran develops missile, nuclear and drone technology, according to three Iranians with knowledge of the attack and an U.S. official.

The strike on Wednesday evening hit the site of the Parchin military complex, about 37 miles southeast of the capital, with quadcopter suicide drones, according to the Iranian sources, who were not authorized to speak publicly. The drones exploded into a building used by the Ministry of Defense for research on drone development, killing a young engineer who worked at the ministry and injuring another person, they said.

 

Iran’s Terror Plot Against Israelis in Turkey

Recently, Israeli Mossad, in collaboration with Turkish authorities, thwarted multiple plots by Iranian Revolutionary Guard cells to kill Israeli tourists and businesspeople. As this article reported,

Israel and Turkey have already stopped several attempts by Iran-backed terrorists to attack Israelis, Prime Minister Naftali Bennett said Monday.

“The operational efforts with the Turkish security forces have borne fruit,” he said in a press briefing. “In recent days, in a joint Israeli-Turkish effort, we thwarted a number of terrorist attempts, and numerous terrorists were arrested on Turkish ground.”

Bennett said Israel and Turkey were working together very closely to stop Iran’s attempt to harm Israelis and Jews. He thanked Turkish President Recep Tayyip Erdogan for his efforts.

Is an Attack Imminent?

On May 17, something significant happened. As reported by Times of Israel,

Defense Minister Benny Gantz warned on Tuesday that Iran is just a “few weeks” from accumulating sufficient fissile material for a bomb. It is also working to finish the production and installation of 1,000 advanced centrifuges enriching uranium, including at a new underground site at the Natanz nuclear facility, he said.

Then he made this startling comment:

The price for tackling the Iranian challenge on a global or regional level is higher than it was a year ago and lower than it will be in a year

In other words, I think he is saying that it is better to take major action against Iran sooner rather than later!

Exercise in Cyprus

It appears as if Israel is actively planning military strikes against its enemies, all of whom appear to be Iranian backed (if not Iran itself).

Earlier this month, Israel wrapped up a major military exercise in Cyprus. As Times of Israel reported,

The Israel Defense Forces on Thursday wrapped up a major military exercise in Cyprus, simulating a military ground offensive deep inside Lebanon in a potential war against the Iran-backed Hezbollah terror group.

The Mediterranean island was chosen both for its Lebanon-like terrain — mountainous along a coastal plain — and its proximity to Israel. The drill simulated various difficulties in a ground assault, such as food, water, and ammunition supply; communication issues; and the general complications in operating in unfamiliar territory.

“The first challenge we prepared for was accumulating troops,” said Brig. Gen. Ofer Winter, commander of the 98th Paratroopers Division, which led the exercise.

Winter said thousands of troops were brought in to play the Lebanese side, using boats, planes, and helicopters. “We arrived in the field with great intensity. We spread out the troops, and they began operating against key areas and significant targets we identified as being important to defeat,” he said, referring to mock enemy military sites and rocket launching grounds.

Major Air-Raid Drill in a Far Away Nation

Also, early this month, Israel practiced a wide scale strike on Iran. As this news article reported,

Dozens of Israeli Air Force fighter jets conducted air maneuvers over the Mediterranean Sea on Tuesday night, simulating striking Iranian nuclear facilities.

According to a statement by the Israel Defense Forces on Wednesday, the drill included “long-range flight, aerial refueling and striking distant targets.” And according to Channel 13 news, more than 100 aircraft — as well as navy submarines — participated in the drill that spanned some 10,000 kilometers.

Over 100 warplanes! That is a large strike force.

Then, this news article reported a few days ago,

In face of Iran’s continued development of a nuclear capability, the Israeli Air Force has developed a new capability to be able to fly its F-35 stealth fighter jets from Israel to the Islamic Republic without requiring mid-air refueling.

Israel Warnings

Next, as this news article reported on 13 June,

Israel Defense Forces Chief of Staff Lt. Gen. Aviv Kochavi on Sunday warned that overwhelming force would be used in Lebanon in the next potential war with Hezbollah.

Speaking at the first National Conference on the Home Front, Kochavi detailed the IDF’s strategy for responding to an attack from the radical Shiite terrorist group.

“We will deal massive strikes in the war, but we will warn the residents and allow them to leave the areas. I say to the residents of Lebanon: I advise you to leave, not only at the beginning of the war but from the beginning of tensions and before the first shot is fired. I advise you to leave those areas because the attack force will be unimaginable – like nothing you have witnessed before,” Kochavi said.

Very sadly, in every war, civilians will be caught in the crossfire.

Will Other Nations Support Israel?

For Israel to conduct a military strike on Iran, other nations have to be involved. Israeli warplanes must fly over foreign countries and back. The question is which ones?

If Israeli warplanes fly over Jordan and Iraq. This will require U.S., Jordanian and Iraqi approval or cooperation. The Iraqi government is now controlled by Shiites, who favors Iran.

The next alternative will be over Saudi Arabia. There has been some warming of relationships between Israel and the Sunni Arab nations lately because they have a common enemy in Iran.

Possible Consequences

There are many ways for an Israeli strike on Iran to escalate into a wider regional war. For example,

  • If Saudi Arabia facilitated a flyover by Israeli warplanes to strike Iran, you can expect any Iranian retaliation to include Saudi Arabia as well. Perhaps Iranian proxies in Yemen will cause serious trouble for them. Iran and their allies could target Saudi oil fields.
  • In retaliation, the Iranian navy and drones may attempt to block the Straits of Hormuz, which is a strategic choke point for the global flow of oil. The U.S. Navy will have to be involved to overcome this global economic threat.
  • We can expect Hezbollah in Lebanon and perhaps even Hamas in Gaza to rain rockets into Israel. The Israelis will have to conduct a ground operation in Lebanon to deal with this threat, which they had been practicing in Cyprus. Also, the Israeli civilian population will have to be prepared.
  • Hezbollah may find a way to target the Israel’s new Karish gas rig, which Lebanon claims is in its territory.

Economic Fall Out: Inflation May Get Worse

Recently, Saudi Arabia offered to increase oil production to help Europe wean itself from Russian oil. If Saudi oil wells are damaged or destroyed by Iran or its allies in Yemen, additional production will likely cease.

If the Straits of Hormuz are choked, it will impact oil prices for the entire world.

Europe also signed a gas deal with Israel to reduce its dependency on Russian gas. If Hezbollah manages to damage or destroy Israel’s gas production in the Mediterranean Sea, this deal is not going to happen either.

It is a no-brainer that energy prices are going to spike if war breaks out in the Middle East, and at a time when global energy prices are already at an elevated level.

That means there will be further upward pressure on prices. Today’s daily headlines about inflation will be nothing compared to what is to come.

Gold prices may shoot up also.

Can a Major War be Avoided?

What if Iran acquires nuclear weapons? Then all bets are off. Major population centers in Israel will be threatened. If Iran attacks Saudi oil fields with a nuclear weapon, how can radioactive oil fields be repaired? It may not even be possible. That is why there is an urgency to take major action to stop Iran from acquiring nuclear weapons.

If Israel strikes Iran, how can it keep other nations from being dragged into a war? The best case scenario is for a swift military victory against Iran and its allies. Maybe the oil and gas fields can be spared, or if not, hopefully the damage is not catastrophic. Even in the best case scenario, it will take some time to repair the damage. Therefore, inflation will remain elevated for quite a while.

Unfortunately, all this can only mean war will revisit Middle East sooner rather than later. This is what I fear. I hope that all my fears will be unfounded.



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Insider Take 6/24/22: Vaccine SAE and Children

“It’s disgusting…I’m horrified.” Chris’ take on the latest study exposing the vaccine’s special adverse events, and what that means for parents who want to vax their infants and young children.



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Thursday, June 23, 2022

Bonus Video: Tight Oil Supplies and The U.S. Strategic Petroleum Reserve

For some reason, America’s strategic oil reserves are disappearing. President Biden’s press secretary said they began distributing it in April this year, but…it may not be the truth. Is there a global oil problem too? Check out Chris’s hot take on the world’s energy supply.



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Informed Consent LiveCast, Tonight, June 23, 7 p.m.

Join Chris tonight for an Informed Consent LiveCast as he discusses the latest news and policies that you need to know about and prepare for.

Tune in Live tonight, June 23, at 7 p.m., EST here at Peak Prosperity.



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Wednesday, June 22, 2022

Peak Insider Live Replay: June 22, 2022

In this latest Peak Insider Live, Chris and Evie answer questions on COVID, the Russian conflict, the economy, and building resilience.

Watch the Replay

 



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Off the Cuff: Chris Discusses SIDS and SADS

Mainstream Media is now making all kinds of excuses for the recent, massive, scary increase in something called Sudden Adult Death Syndrome (SADS), but none seem willing to link the spike in mortality of healthy young adults, like professional athletes, to the sudden, compulsory spike in new vaccines forced on entire populations. And what’s even worse, they now want to guilt parents into giving the vax to their infants.

But that’s not all, overnight the new SIDS guidelines have changed, and it includes “routine vaccines”. And oh, ever looked at child mortality rates by country? Guess who has the highest infant/toddler vaccine numbers and infant mortality. Any correlation?



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Tuesday, June 21, 2022

Investing in the ‘Age of Consequences’

Economic collapse is now unavoidable. Whether this happens via a deflationary or an inflationary or a stagflationary collapse is an open question, but also academic. In any of these future states, the average person gets economically harmed while the wealthy do relatively better.

And by “collapse” I don’t mean “things suddenly go all Mad Max all at once.” I mean 1) whole sectors like finance retreat and don’t come back, 2) printing money comes to be regarded as an act of sabotage that harms more than it helps (thereby ending a 40-year-old regime of currency debasement), and 3) we all suddenly have to begin living within our means.

Those who can grasp these macro trends have the opportunity to fare far better than those who don’t. While there are no guarantees in life, at least you can stack the deck in your favor. If you haven’t already done so, please watch the Crash Course – a video series I first made available to the world back in 2008 and updated in 2014. It is both predictive and explanatory.

So, my message is simply this; a recession is on the way. Possibly a very bad one. It will scare a lot of people, especially those in Europe who are facing an extraordinary energy shock to boot.

Eventually, the central banks will cave in to pressure (mainly from their rich and powerful friends) to once again resume printing. That moment will be the starter’s pistol for the next phase of our decline.

To get through this in style and with a minimum of disruption, we’d need effective, bold, and well-informed leadership. Sadly, we haven’t got any of those sorts in charge at the moment.

So, buckle up, this next year is going to test us all. Become resilient and find your tribe!



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The Pace of Change Says So

There’s nothing wrong with falling out of a plane. It’s hitting the ground that kills you. In other words, it’s the pace of change that matters more than the event itself, or any prior history.

Europe is facing an extraordinary energy shock. I cannot find a historical parallel outside of a war.

Interest rates are spiking rapidly, especially mortgage interest rates. Bond prices are cratering globally, and Japanese government bonds are exploding higher in yield forcing the Bank of Japan (BoJ) to respond with legendary never-before-seen rates of currency printing. The Yen is falling dramatically against the dollar.

All of these gyrations are individually troubling, but as a collection of indicators are saying, “Houston, we have a problem.”

What we don’t know is what happens next as 40 years of increasingly ill-advised and ever-larger monetary interventions by central banks come to a crashing halt.

Honestly, there’s nothing they can do. Too many of our current predicaments are structural in nature and therefore almost completely resistant to anything the central banks might do. Raise rates, lower rates, print more, don’t print more…none of that matters to a global energy landscape that is in structural short supply.

Once you understand the energy situation, a lot of the rest is easier to grasp. Net energy is everything.

The conclusion to all of this is that it’s time to become as resilient as possible. Tend those gardens, get to know your neighbors better, and safeguard your wealth as much as possible.



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Off the Cuff: Chris Discusses The Restart of Germany’s Coal Plants

Germany’s addiction to renewables and Russian oil and gas, and it’s own self-sanctioning of Russian oil and gas, forces a restart of coal-fueled power plants to avoid energy shortages. Other nation’s in Europe are in the same self-induced predicament.



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Sunday, June 19, 2022

Fed Raises Rates 75 Basis Points; Europeans Back Immediate Peace

The big news of the week: on Wednesday, the Federal Open Market Committee (FOMC) announced a rate increase of +0.75% (75 bp) to 1.75%.  This was hinted at on Monday, and as per the Fed press conference at 14:30 Eastern on Wednesday, the rate increase was blamed on last week’s surprisingly hot CPI print (0.97% m/m, 11.64% annualized). It turns out, this week’s producer price index (PPIACO) looked 3 times worse (+3.03% m/m, which is 36.36% annualized). Powell told us in the press conference that another large rate increase might occur if the CPI came in with another hot reading next month.

Immediate effects: 30-year mortgage rates jumped by 50 basis points (bp) to 5.78%. We haven’t seen mortgage rates this high since 2008. I’m guessing the housing market will take a bit of a tumble in the next few months.

Crude fell 3 days out of 5, losing -9.72 [-8.20%], with most of the losses happening on Friday. You can see the crude OI (blue line) is at a multi-year low, which tells me that the banksters don’t want to take any large positions in crude.The banksters used to be ok with the “shorting the rallies” game (OI tops matched with price tops), but that trading game stopped in February.

The weekly candle print was a swing high/bearish reversal (64%), which is fairly bearish. Crude appears to be headed lower.

Natural gas was hit very hard, plunging an astonishing -1.78 [-20.32%], dropping to a 2-month low. Natgas also printed a weekly bearish reversal pattern (70%).  Most of the week’s losses came on Tuesday; a fire in an LNG facility took out 2% of US natgas demand. (Note: LNG = natgas-for-export, so, a fire in a US LNG facility = more natgas for U.S. Plebes, and less for EU Plebes).  The LNG facility fire actually happened last week, but the company reported on Tuesday that the plant restart would take until “late 2022.” Note: the instrument “NG” = futures for U.S. natgas. This week’s plunge is good news for US natgas buyers, and if it persists, should help U.S. inflation numbers. Eventually.

There sure are a lot of fires in plants these days.

Equities also plunged, with SPX falling -5.79% to a new multi-year low. Most of the damage happened on Monday – after the Fed hinted at that 75 bp rate increase, which then came true on Wednesday. The sector map looks mixed but mostly bearish (leaders down: energy -20.71%, utilities -9.97%, materials -9.01%). Financials and tech did (relatively) well, so it wasn’t a completely bearish map. Even after all the fuss, the VIX ended the week at 31, which – given the correction in progress – really isn’t all that bearish.

Doctor Copper also had a bad week, falling -5.84%, dropping to a new 4-month closing low. Copper dropped 4 days out of 5, with the only positive day being Fed Wednesday. Copper is more-than-hinting at a recession-to-come. That’s why we call it Doctor Copper: “I am diagnosing that the economy is catching a cold…”

Note copper prices are international, rather than being local to the U.S. Transport for copper is easy – just toss a bar into a ship or a plane, and you’re good. That doesn’t work for natgas.

Gold was absolutely pounded on Monday, but then rallied back for much of the rest of the week, ending down just -1.64% [-30.78].  Gold’s OI, which seems to matter more for gold than for most other traded items, is hinting at a low; the falling OI suggests to me that the banksters have been closing out their short positions over the last month or so regardless of the rallies. See how – before this month – peaks in OI almost always align with peaks in price for gold?  And the valleys in OI align with the lows in price? And over the past four weeks, the OI has just been dropping, even though gold has rallied. That’s positive for gold. Probably. Eventually. Someday.

The buck rallied for the first part of the week, then fell on Thursday and Friday, ending the week up +0.44% [+0.46]. Call it mildly positive for the buck.  International capital probably likes the prospect of higher rates for their USD deposits (10-year yield +6 bp to 3.21%), but there’s that recession on the horizon also.

A dollar rally is usually a “global risk off” signal, and/or a strong rate differential between USD and the other major currencies (EUR, GBP, JPY, etc). Probably both are happening here.

It all adds up to “hints of recession” – and due to Doctor Copper looking a little faint – not just a U.S. recession.

I also assume that Big Money over in Europe would much prefer the U.S. 1-year at 2.86%, vs the German 1-year at 0.46% – resulting in capital flows and a dollar rally. Theoretically. Assuming the EU doesn’t raise rates by 75 bp too.


Ukraine:

“Health”:

Democracy Dies in Darkness:

U.S. Politics & Markets:

  • Ed Dowd did a back-of-the-envelope calculation on a “commercial fire rate” and compared it to the number of food processing plant fires we’ve seen in the U.S. Net-net: all these “food processing plant” fires are happening at a rate 382% above the “normal fire rate”. Data: 36,000 processing plants, 97 fires, standard commercial fire rate 0.056%/year, this year’s rate for processing plant fires: 0.27%. The year is only half over. “That’s an awfully nice food processing plant you’ve got there…”
  • Crypto Hedge Fund Three Arrows Capital Fails to Meet Margin Calls This sort of thing leads directly to defaults, more price drops, and more defaults for leveraged players.  My guess: unlike in 2008 and all that mortgage debt, the Fed will not be riding to the rescue.
  • 2000 Mules has moved the needle; “Among voters who have seen ‘2000 Mules’, 85% of Republicans, 68% of Democrats and 77% of unaffiliated voters say the movie strengthened their conviction that there was systematic and widespread election fraud in the 2020 election.” But not enough have seen it just yet.

Will Russia/Ukraine see negotiations relatively soon? It is hard to say. The Western Oligarchy will be dragged into the peace process kicking and screaming. Especially the U.S. The longer they put it off, the worse the terms will be.

Viewed through the lens of currency, it seems that Mister Price Hike (Putin) has already won his war, due to the destruction of the opposing military force.  Will this result in a new anti-WEF group that forms around Russia?   It seems like that’s already happening.

Since Feb. 2, 2022 vs. the USD: Ruble: 31% gain.

As someone who studied the cold war and geopolitics in general, the shocking ineptitude of the WEF/West in this entire affair is really astonishing. If you discard 60 years of history and experience, this is what you get. I never really quite understood how Rome fell. Now we’re seeing it happen in real time. It is due to a combination of traitors whose loyalties lie elsewhere, rank stupidity, and “the Disease of Victory”. Here’s a piece from 1968 on that same topic.

Build Back Better! Climate Change! No (food, heat, electricity, treatments, or transport) For You!



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