Iran keeps getting headlines about their involvement with Hezbollah, the capture of Israeli soldiers, and how the country has provided the weapons being used against Israel.
A military strike by Israel on Iran could throw the financial markets into a tailspin, which could very well involve the Chinese, as well as the Russian痴.
If Israel does strike Iran, and China decides to come to the rescue, its first strike against the west may be financial, and not by the use of force. An unwinding of China痴 massive hoard of longer term U.S. debt would cause long term interest rates to rise, and further weaken a softening U.S. economy.
Keep in mind that many oil producing OPEC countries hold vast amounts of U.S. debt as well.
I find it odd given the sell-off in the stock market that there was to rush to reinvest the stock proceeds into Treasuries. Usually, when declines of any magnitude are seen in the stock market, Treasuries rally.
I don稚 think the Chinese want to be involved in any military conflict, particularly with the Olympics coming up in 2008.
While the oil markets continue to rally, oil stocks began to soften. Do the energy markets know something we don't?
I guess we will find out soon, but a softening worldwide economy could reduce demand for energy.
Now that we are two weeks into earnings season, the market has been disappointed by the early results. Usually, the companies with the best results report earnings first, and the worst earnings are announced toward the end. If last week and this week are any indication, Q2 (with the exception of the energy companies) earnings could be a bust.
