Investment Contrarians

How the U.S. and Israeli Presidents Are Affecting Your Pocketbook

By for Investment Contrarians |

While the financial crisis continues to unfold across Europe, far deadlier tensions are rising in the Middle East. The market sentiment for oil prices should be bearish, given the current economic conditions; however, continued statements by leading members of Israel’s government about concerns regarding the potential for Iran to gain nuclear weapons has once again pushed up oil prices. The higher oil prices go, the harder it hits the average consumer.

This time, Prime Minister Benjamin Netanyahu is raising the stakes by potentially alienating U.S. President Barack Obama. Over the past few days, the political climate between Israel and the U.S. has certainly cooled. Among the verbal volleys are statements by the Israeli prime minister that no country, including the U.S., had the moral right to prevent a strike by Israel. Additionally, Israeli officials also came forward in denouncing what they see as lackadaisical U.S. foreign policy with regards to Iran.

Market sentiment regarding oil prices is naturally on the edge with any scenario that occurs in the Middle East. That region has been and will continue to be a powder keg; any spark could set off a massive spike in oil prices. This lightning-fast response by oil prices to any comment by political leaders is the reason many participants monitor the market sentiment very close.

The relationship between Israel and the U.S. has generally been quite close and mutually beneficial. However, the current Israeli prime minister appears to be frustrated by the lack of motivation from the current American administration in supporting an attack on Iran. The U.S. doesn’t have many allies in that region; helping Israel does make good long-term sense, especially when we’re talking about Iran, with its main goal appearing to be the complete destruction of a neighboring country and all of its population.

While Israel might be frustrated, America has played a large part in enacting strong financial sanctions against Iran. It appears that Israel also wants America to lead the attack. All of this comes in the middle of an election in the U.S. Naturally, the current administration is focused on getting re-elected. To put this kind of pressure on an American president in the midst of the election doesn’t make much sense to me.

WTIC

Chart courtesy of www.StockCharts.com

Oil prices have been extremely volatile over the past year. Market sentiment has shifted from extremely bearish to bullish in the past couple months. Once oil prices broke the downtrend in early July, the market was set up for a move back to its 200-day moving average (MA). You’ll find that, in many situations, the price will gravitate toward the 200-day MA with the help of the market sentiment.

Obviously, the current trading range for oil prices will not remain for long. Either an event such as a military strike will occur that will shift market sentiment to extremely bullish proportions for oil prices, or a compromise will be reached and the true economic situation will be evaluated with a more bearish overtone to oil prices. In either case, I would wait to see a break from this range for an indication of where oil prices and market sentiment for this commodity are headed.

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  • Al

    I want you to know that many US citizens agree that our president has no right to tell Israel to do ANYTHING, especially give up the land God gave you. There is no place in the US Constitution that says we are to be the world's policemen, but anyone who curses Israel or especially Jerusalem, the City of David, will be cursed. Every time a US president goes against Israel, we have earthquakes, hurricanes, etc., but some don't listen. Usually, the catastrophe happens within a day or two. Look it up if you don't believe me.

  • Barry

    Existential threats have no timetable. Iran knows the U.S. will do nothing till after the election, no matter what Iran does. Economic sanctions might hurt the average Iranian, but not the mullahs and their military. We might not be able to wait till Jan. 20 when whichever candidate is sworn in. Meantime, the U.S. should ramp up its timetable for becoming energy independent so that we can supply not only ourselves but our allies. If there was ever a time for bi-partisan unity, our foreign policy re. Iran would be it.

  • Peter

    AL you are an idiot! If we are giving Israel billions a year, we have every right to dictate whatever we want to them. Besides, everybody knows they stole the land from Palestinians and they have nukes. The only way to have peace in the middle east is create an patelstian state and give nukes to iran like we did to Israel. There will never be peace till there is balance of power. Israel doesn't want peace because it will have to give up all that land it stole.

  • Howard May

    Let me ask you the same question "Are you an idiot." Now let me answer it,
    "Yes" When you start saying "everybody knows" it shows how little you do know. Of course, let's give Nukes to the most unstable, fanatical country in the middle east, Iran. After they take care of the little satan, israel, they can turn their attention to the Big Satan, America. It's especially a good idea to give nukes to people who feel that dying for a cause is preferable to living for it.
    After consideration, the term idiot is too mild for you.

  • Howard May

    While we're at it, most people (you excepted) know that the land that palestinians are claiming was once ancient Israel, stolen by the Romans, Turks, British and a few others over the centuries. Also, the US didn't give nukes to Israel, a minor but important point. And finally, if you're so concerned about justice for people whose land was stolen, you really ought to be worked up about the Native Americans and Mexico. Are you ready to give back Texas, California, most of N and S. Dakota, Wyoming etc. etc.?

  • George

    Come on Al……Stop the God boggie man stuff! According to you Israel should rule the world……Send your own darned kids there to fight and leave mine alone!