Politics and economics, foreign policy and U.S. elections seem to be coming to a head in a very fraught way. Saudi Arabia has issued a threat to sell three-quarters of a trillion dollars in its U.S. dollar portfolio if the U.S. Congress passes legislation that would enable lawsuits against Riyadh for its role in the 9/11 terrorist attack-a subject believed to be elaborated upon in 28 pages of the 9/11 Commission report never released to the public. The Obama administration opposes the legislation, and while Senate candidate Hillary Clinton was lukewarm to the idea, the candidate came out in support of the measure Sunday, ahead of Tuesday's crucial primary in New York, where most victims of the terrorist attack lost their lives.
SA contributor Ian Bezek doesn't think the U.S. will permit Saudi legal exposure and believes the Saudis are bluffing in any case. (See also his fascinating commentary on Brazil's current instability.)
My own take: We've seen this sort of threat work a generation ago when the U.S. objected to the British invasion of Egypt in 1956. The Treasury threatened to sell its sterling and the Brits judged it a bad time to take risks in light of the country's post-war economic vulnerability. The U.S. today is economically wobblier than in the past. But the separation of powers, not to say the New York vote, would seem to indicate the possibility of a collision between economic, foreign and judicial policies. Overall, this whole uncertain episode seems to heighten feelings of vulnerability.
More news and views for advisors:
- A key cause of the U.S. economic funk today derives from a stagnant labor market, says one SA analyst.
- Another SA contributor and RIA says, ironically, that hiring has recently accelerated even as other indicators decelerate.
- A third SA contributor, also an RIA, argues that reward prospects in this market are clearly diminishing.
- And a fourth says: don't even think about trying to forecast the market.
- Meanwhile, a sure thing: Two weeks left to scoop up a juicy and guaranteed high yield of 1.64% -- before promised I-bond payment falls to 0.26%.
- Humor alert: energy markets roiled, Doha talks collapse as Iranian delegate catches NBA playoffs.