Wednesday, October 21, 2020

What a Difference a Day Makes

Ask the CFP

Submitted Graph | Oil Price Graph. Source: Macrotrends.com.


Peace, commerce and honest friendship with all nations, entangling alliances with none. ~Thomas Jefferson 


Question: What are your thoughts on Iran’s response to the killing of one of their top generals by United States? 

Answer: First, let’s preface this with the statement that these views are subject to change based on market conditions and other factors at any time, especially in such a precarious and unpredictable situation. These comments are as of Wednesday, January 8th, 2020, as this is written.  

With the exception of the U.S. withdrawal from the Iran nuclear agreement on May 8th, 2018, this recent event is the most intense action between the U.S. and Iran during the Trump Presidency. Immediately following the news that Iranian General Qassim Soleimani had been killed during an American drone strike. Oil prices have been up, down, up and will likely continue on a rollercoaster ride as this situation evolves.  

General Soleimani was the head of Iran’s Revolutionary Guards Corps special operations unit (Quds Force) with seniority and status in the Iranian government. He was killed on Friday, January 3rd, 2020 at Baghdad’s airport in a U.S. airstrike ordered by President Trump. The Trump Administration held him responsible for the recent ransacking of the U.S. Embassy in Baghdad and he had been a formidable foe of the U.S. The deceased General backed the Assad regime in Syria and directed Iran allies in the region.  

Retaliation was expected and it took place on Tuesday, January 7th, in the form of a missile attack on U.S. bases in Iraq. Trump indicated on January 8th, that the next steps could focus on limiting further aggressive actions by Iran and may even include negotiations. However, the uncertainty and medium to the near-term risk of increased tensions is high.  

President Trump stressed that Iran will not be allowed to develop a nuclear weapon. This aligns with the long-standing U.S. policy that spans across numerous administrations, dating back to a time when Iran used chemical weapons during the 1980s Iran-Iraq war. This could lead someone to believe that the U.S. is focusing on longer-term objectives rather than response to Iran’s recent missile strikes. If U.S. personnel are harmed this could all change.  

It is expected and surmised from Trump’s statements that harsher economic sanctions will be used to influence Iran’s behavior as we seek greater coordination with the European Union and members of the North Atlantic Treaty Organization (NATO) which is an intergovernmental military allianceNATO was founded by the United States, Belgium, Canada, United Kingdom, Norway, Denmark, Iceland, Netherlands, Italy, France, Portugal and Luxembourg in 1949. Since 2017, NATO has consisted of twenty-nine member countries. The fact that the U.S. is energy independent plays a key role in these ongoing discussions.  

The possibility of Iran taking any further action keeps tension at high levels. At this point, it appears unlikely that there will be any physical impact on oil supply or target civilians. Heightened economic sanctions by the U.S. could be implemented, while understanding that anything is possible in such an unstable and unpredictable environment. It will be interesting to see how this plays out in the upcoming days. Stay focused and invest accordingly 

Investors should consider this information as only a single factor in making investment decisions. The information provided is as of January 8th, 2020 and subject to change based on many factors and should not be deemed a recommendation to buy or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. Additional information is available on request. 

“Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.” This article provided by Darcie Guerin, CFP®, Vice President, Investments & Branch Manager of Raymond James & Associates, Inc. Member New York Stock Exchange/SIPC 606 Bald Eagle Dr. Suite 401, Marco Island, FL 34145. She may be reached at (239)389-1041, email darcie.guerin@raymondjames.com Website: www.raymondjames.com/Darcie. 

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