CBOE VIX index futures (VIX), which measure the implied volatility of S&P 500 index options, are trading down more than 3% today, despite some rather worrisome reports from the Middle East (though not exclusively). Brent Crude oil (OIL) contract prices are down nearly 2% today, to $76 per barrel, supporting equity market sentiment. Nevertheless, geopolitical risks now appear to be by far the prevailing factor that could potentially lead to a correction in the markets.
- The United States is expecting 'unjustified' escalatory Chinese actions in the Gulf of Taiwan, during Chinese naval maneuvers, on October 10. Recent diplomatic communiqués from both countries indicate that there is still no substantive agreement, although any direct escalation between China and Taiwan, much less the US, is still out of my hands
- Turkey has ordered the evacuation of citizens from Lebanon, and the country's President Erdogan has been strongly critical of Israeli authorities. Iran indicated that if Israel does not attack 'then there will be no war,' while any attack will be met, with 'thousands of rockets' flying towards Israel. Yesterday, we were still reading news of a contemplated attack on Iran's energy infrastructure
- Today, Israeli President Netanyahu was to hold talks with President Biden and Deputy Prime Minister Kamala Harris. Earlier, it was reported that a trip by Israeli Defense Minister Galant to the Pentagon would not take place, however. Iran, on the other hand, was to attend talks with Saudi Arabia today, after Iranian authorities recently indicated that 'sharing airspace' with Israel, by any Muslim country, would not be tolerated by Iran.
Overall, the still possible attack by Israeli military to Iran, now appears to be the most worrisome. The last few days show that the Israeli side is indeed not consulting all operational activities with the Americans and may retain some independence, including in the event of an armed response to Iran.
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Source: xStation5
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