Time is of the essence not so much for the stock market (it just meanders in the S&P 4200 vicinity), but to prepare dispersed U.S. military installations and units abroad (mostly as relates to the Middle East) for more advanced attacks than ‘presumed’ by Pentagon planners in the last couple years.
FreepikWhat I’m referring to again relates to a key ‘wake-up call’ provided by Yemini terrorists (or Iranians operating ‘in’ Yemen) by their brazen attack either upon Israel, USS Bataan, or obviously USS Carney a few days ago. How so? They used more advanced weapons than were heretofore used by terrorist groups, and that should have been anticipated ever since the drone attack on Oil field storage facilities in Saudi Arabia (by Yemen and by Iran, separate incidents).Today Sec’y. of State Blinken restated at the UN Security Council that the US doesn’t want war with Iran. Well they do, already attacked us in Iraq & Syria. I doubt we’d move the substantial forces we are without prospect of using them but only with a bit more preparation, which is what we’ve felt would take days.
So sure, Israel was caught off-guard (with a slow IDF response to the attacks in-part resulting from Hamas penetrating a computer ‘server’ room at a small base near Gaza, but the cyberhacking probably rippled through their systems, requiring ‘manual recalls’ of troops that were largely home celebrating Shabbat.More recently, the attack by (presumably Iranian) missiles and drones against USS Carney (or proximate targets) was by long-range cruise missiles/drones, perhaps similar to what Iran sold Russia, or based on a knock-off of that one American drone that crash-landed ‘in’ Iran after damaged flying missions over Afghanistan. (You may recall surprise that the USAF or USN didn’t destroy it where it landed inside the Iranian border… they later knocked-off the design.)(Nobody was surprised today, as the Israeli Navy intercepted Hamas ‘scuba divers’ that briefly infiltrated by sea, possibly around the the beaches of Zikim south of Ashkelon, where IDF Navy and air cover fully neutralized the threat. Also notice the U.S. being calm while revealing two dozen US personnel have been injured by Iranian or proxy group rocket attacks in the past two weeks.)
The point of all this is basically that after USS Carney, suddenly the Pentagon ‘gets-it’ and is mobilizing and sending forces and air-defense gear abroad, not just to Israel (though more there too every day), but to our threatened bases. I presume the Pentagon realizes that any conflict with Iran results in attacks on almost all our bases immediately, and hence the current conflict (tragic as it is of course) would pale by comparison. Plus we’d be evacuating thousands of U.S. citizens, not just Government employees, from the Oil fields. And yes, in such a scenario Oil would likely jump over 100/bbl, at least momentarily.A brief reflection on ‘armaments and ammunition’. We’re already moving a bit closer to a ‘wartime mindset’ for procurement. Sure, Congress must accept a need for multiyear production contracts. Industry has the capability to produce more munitions and missiles, but they need to know that they can take orders today for the components they will need tomorrow. It’s squarely in Congress’ hands, but not so simple as Defense Department asking for the authority to negotiate multiyear procurement contracts to allow production lines to remain open. We’re in a transition era that includes battlefield and weapons changes, such as to laser weaponry. Nobody wants a 5-10 year commitment for what will be obsolete ammunition sooner than that. So it will get tricky. For now this ties-into the crisis in an odd way: locally we are outgunned absent reinforced air defenses and even offensive weaponry. That’s being addressed this week.
Market ‘X’ray: Resilient big-techs kept the market sane enough today, so that breadth could improve a bit across-the-Board, albeit not roaring higher. Tricky near-term, as hard to imagine an expanded crisis that involves Iran wouldn’t spike Oil (temporarily) and concurrently hit the S&P, even if swings transitory.Overall it’s hard to imagine a ‘worst-case challenge’ to the U.S. and how many markets might respond. That would be an expansion of the war (Iran already is encouraging that intelligence suggests, even without a broad Gaza invasion they presumably would be their ‘excuse spin’ for their proxy groups attacking).I believe the Yemen-Iran attack on USS Carney tipped their hands as to wide distribution of more advanced weapons to these various groups and suspect the United States (for whatever reason) was unprepared for this eventuality.The United States is starting to realize that the entire Hamas operation indeed was likely set-in-motion ‘to’ provoke Israel and/or the U.S. into action, and we will use a simple term, blow-the-top off the whole Middle East. Why so before Iran acquires (which is hopefully never) nuclear weapons? Likely due to Saudi Arabia close to a security deal including Israel, which would be impossible for Iran and it’s proxies to offset.
Meanwhile . . . Texas Instruments (TXN) missed numbers ever-so-slightly, while Microsoft (MSFT) beat and so did Google (OK.. Alphabet) (GOOGL), about that invited selling. Overall Google did about an 11% revenue increase, big-cap growth persists.Google missed a bit in its ‘Cloud Division’, and that’s probably the rationale for the pressure. Conversely, Microsoft did better in it’s Azure (their cloud sector). LinkedIn is a Microsoft division, and they may have some contraction their.We also got Visa earnings, they beat and announced a buyback. We’re don’t follow Visa (V) particularly, but it’s an example of resilient consumer spending as they put it.. and cross-border (that part might contract for the near term).Also we got SNAP earnings (SNAP) better than consensus and shares jumped too. It is another we don’t follow closely, but they are involved with SoundHound. In the social area I suppose we should mention META being sued by 42 State Attorney Generals alleging deceptive addictive products for young people. As Meta speaks tomorrow, we’ll see how they respond to this (mostly Instagram related issues they have with Meta, more so than Facebook I presume, and definitely not about Threads, which absolutely did not dethrone ‘X’ at all).As to Apple’s ‘scary fast’ (allusion to Halloween event), that tagline is a nod to the likely unveiling of its next-generation M3 silicon chip. Oddly at 8 pm ET it’s likely Apple will show off new iMac computers in a move to boost Mac sales, which have been down despite a fairly nifty 15″ MacBookAir. While probably a new version of the 24″ iMac, anyone who knows the products hopes for a 32″ iMac, but due to years of neglecting the 27″ form, users gravitated to either the MacBook/Pro(s) only, or a Mac Mini or Studio combined with a display. It’s increasingly realized professionals will update computers more than displays, so there is comparatively little interest in all-in-one units. However, I believe it would sell well in office or reception environments (favorable esthetics too).Lastly you have GM struggling more with their largest plant closed (strike) and the Cruise business stopped flat in its tracks in California. More layoffs there, with pressures on Stellantis and Ford too. Perhaps time to settle all of it.
Bottom-line: Perhaps Microsoft CEO saying over 18k organizations and a million OPENAI service users, is indicative of how AI is moving on. Certainly there is a focus on the extent to which a stalling, calming or war acceleration might affect markets, beyond Oil of course (which retreated a bit).Today’s market did gain some traction, and probably will persist Wednesday, but I’d not get excited. Again we tended to advocate nibbling in purges, not in the surges, and that approach is maintained for now. It’s not merely a wartime strategy or anything complex, it’s just combinations of seasonal low prospects and caution about chasing anything when you don’t know what lurks around a corner as far as attacks on American facilities or Israel. And there’s worrisome levels of antisemitism, that normally is limited to truly ignorant people, except for what’s going on with colleges. Increased war triggering hostility vs. what is going to be needed: resilience and perseverance to prevail over barbarism, to somehow derail a Muslim ‘reconquista’ (to borrow a term from ancient Spain).
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