Ok, so the Mountain Police are no longer about. Still, they had a point. They didn’t need a badge, template, rule-of-thumb or anything else; they operated on pure instinct. So should we.
We have highlighted the risk from the Middle East, to be delivered through the vehicle of crude prices. Our role here is to provide comfort to our clients, to provide (once again borrowing from the past) a bridge over troubled waters, and guidance.
The dynamic associated with the Middle East is not a thing of economics. It is a thing of political science perhaps, more accurately, human science.
Most of us want a say in our future. This applies equally to what on the surface appears to be a raucous and unruly mob in the Middle East. Yet what many now call an Arab Spring has still not registered by the way of implication with most Americans, including perhaps, most investors, most planners.
That is why we cautioned earlier to look past Libya. Crude (WTI) printed 108.31 today but clients are to recall that our top-side target set late Feb is 120.
Keen observers, keen enough that is to discard the headlines, understand this is not just tied to Libya. The business of the Middle East is a singular one - to be dangerous.
We have monitored events in the Middle East for 5 years, an earlier blog dedicated to that exercise. And so, those of us who understand the dynamics of this region know for example that it is the malign influence of Iran which can be found wherever there is unrest, in Bahrain, in Yemen.
Sure, Bahrain is tiny little island. But the violent crackdown there by authorities poses a larger potential threat than Gaddafi could ever cook up over in Libya. We’ve already highlighted the rivalries between the Saudis and Iran and the Bahrain link up.
Then there’s Syria. If the Syrian regime were to be severely weakened by popular dissent Iran's influence in Arab affairs would almost certainly be reduced -- in both Lebanon and the Palestinian territories. That’s not a bad thing. Yet a weakened government there might spark open conflict between the Sunnis and the Alawites in Syria, who hate each other. This could greatly disturb the whole region, and as one observer noted, provide a nightmare scenario for the West.
See what we mean?
So it’s a stew; but one thing’s for sure - these folk are prone to violence. And so are most of the leaders, and all of them, this writing, are totally paranoid. We can therefore not dismiss a direct Iranian / Saudi conflict. We cannot dismiss an Israeli (remember them?) strike.
So unlike the youth of Wall Street, we don’t need a formula to understand the likelihood of impact. We don’t need a template to know that present crude prices are cutting into spending; we don’t need a rule-of-thumb to know that something north of 110 for three months will cut 1% from GDP. And that folks, is the risk.
Robert Craven
We have highlighted the risk from the Middle East, to be delivered through the vehicle of crude prices. Our role here is to provide comfort to our clients, to provide (once again borrowing from the past) a bridge over troubled waters, and guidance.
The dynamic associated with the Middle East is not a thing of economics. It is a thing of political science perhaps, more accurately, human science.
Most of us want a say in our future. This applies equally to what on the surface appears to be a raucous and unruly mob in the Middle East. Yet what many now call an Arab Spring has still not registered by the way of implication with most Americans, including perhaps, most investors, most planners.
That is why we cautioned earlier to look past Libya. Crude (WTI) printed 108.31 today but clients are to recall that our top-side target set late Feb is 120.
Keen observers, keen enough that is to discard the headlines, understand this is not just tied to Libya. The business of the Middle East is a singular one - to be dangerous.
We have monitored events in the Middle East for 5 years, an earlier blog dedicated to that exercise. And so, those of us who understand the dynamics of this region know for example that it is the malign influence of Iran which can be found wherever there is unrest, in Bahrain, in Yemen.
Sure, Bahrain is tiny little island. But the violent crackdown there by authorities poses a larger potential threat than Gaddafi could ever cook up over in Libya. We’ve already highlighted the rivalries between the Saudis and Iran and the Bahrain link up.
Then there’s Syria. If the Syrian regime were to be severely weakened by popular dissent Iran's influence in Arab affairs would almost certainly be reduced -- in both Lebanon and the Palestinian territories. That’s not a bad thing. Yet a weakened government there might spark open conflict between the Sunnis and the Alawites in Syria, who hate each other. This could greatly disturb the whole region, and as one observer noted, provide a nightmare scenario for the West.
See what we mean?
So it’s a stew; but one thing’s for sure - these folk are prone to violence. And so are most of the leaders, and all of them, this writing, are totally paranoid. We can therefore not dismiss a direct Iranian / Saudi conflict. We cannot dismiss an Israeli (remember them?) strike.
So unlike the youth of Wall Street, we don’t need a formula to understand the likelihood of impact. We don’t need a template to know that present crude prices are cutting into spending; we don’t need a rule-of-thumb to know that something north of 110 for three months will cut 1% from GDP. And that folks, is the risk.
Robert Craven
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