Deja Vu: U.S. Bombs Iran

Written By Brian Schreiner

Weekly Investment Update | By Brian Schreiner

Over the weekend, as diplomats were exchanging draft terms to revive the nuclear agreement with Iran, the U.S. launched airstrikes on Iranian nuclear infrastructure. This sudden act of aggression shattered any remaining illusions of Trump’s commitment to peaceful negotiation in the Middle East.

The parallels with the 2003 invasion of Iraq are hard to ignore. Once again, Washington has manufactured threats to create a false sense of urgency to justify the use of military force.

In 2003 it was Saddam Hussein’s alleged weapons of mass destruction. Today, it’s Tehran’s enrichment facilities; none of which, according to the International Atomic Energy Agency (IAEA), are currently weaponizing uranium.

As of last week, the U.S. intelligence assessment continued to be that Iran “had not made a decision to weaponize its nuclear programs.” In a May 31 report the IAEA said it “has no credible indications of an ongoing, undeclared structured nuclear programme.”

U.S. propaganda leading up to the invasion of Iraq in 2003 convinced the American public to support the war, which we now know was based on outright lies, deception and purported ties between Saddam Hussein's regime and al-Qaeda. Post-invasion investigations found no stockpiles of “weapons of mass destruction," and conclusively debunked the primary justifications for the war.

The mainstream media is spineless and always echoes the drumbeat for war. Iran has retaliated against targets in Israel and U.S. military positions in the Middle East and we should expect acts of terrorism to follow, sooner or later.

We can debate the facts today, but time will tell and history will reveal the truth and the ultimate results of these conflicts.

Financial markets are surprisingly calm. I expected the prices of oil and gold to spike and that stocks would fall today. Oil prices are down, gold is up and stock market volatility has remained low and trading near all-time highs.

There’s a high degree of complacency in the atmosphere but we are in an increased risk environment. Aside from the geopolitical risks, there are numerous near term market uncertainties. We've seen worsening economic data. Jobless claims, retail sales, building, housing, and other data have disappointed. And there are still tariff related risks, and inflation is expected to increase, potentially leading to stagflation.

This is a good time to be cautious despite the fact that financial markets are behaving like everything is fine. Iran could obstruct the Strait of Hormuz, which could send oil prices and inflation higher. Iran’s strikes today against the U.S. military in Qatar may lead to a prolonged and wider war. If there is a strike on American civilians at home or abroad, we expect U.S. officials to use it as an excuse to drag the U.S. into another long term conflict. α

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Brian Schreiner
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