Aly-Khan Satchu

Seismic Geopolitical Events Have Little Effect on Markets

Dear Matt,

A very interesting piece. May I challenge a couple of your conclusions.

The blow off top to $147.00 was substantially driven by fears that the US or Israel was readying an attack on Iran. Quite properly, the consequences of such an attack were impossible to model. Iran is not Iraq. It is a materially different proposition. Once the President ruled this out the market slipped into free fall.

Re: Gaza

The Gaza strip is best characterised as a prison. Therefore, besides lobbing a few totally ineffective rockets, there is no risk of reaction or contagion. Therefore, Gold and Oil were unable to rally. It hardly compares with the toppling of the Shah [for example] when Gold surged last time around.

Re: India and Mumbai

The Sensex is one side of the coin. Have you had a peek at the Karachi stock Exchange? Thats certainly reacted. The Sensex had already tumbled from over 20,000 to below 10,000. The attack whilst alarming was not material.

Re: Russia and Georgia.

Putin certainly served notice of a sort but within a few weeks, the Economy cratered world wide. Had that episode occurred in the early months of the year the reaction would have been entirely differently.

I wish you a wonderful new Year.

Aly-Khan Satchu
rich.co.ke

I have written a commentary all year here
www.rich.co.ke/rctools...

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