Market Call: Latest Mideast War Raises Geopolitical Risks

Hamas launched a coordinated surprise attack on Israel today. The timing suggests that Iran's mullahs instigated their surrogates in Gaza, hoping to disrupt the peace negotiations between Israel and Saudi Arabia. Israel will undoubtedly launch a massive counter0ffensive. The question is whether Hezbollah will open up a second front on Israel's north.

Geopolitical crises in the Middle East have usually caused oil prices to rise and stock prices to fall. More often than not, they've also tended to be buying opportunities in the stock market.  Much will depend on whether the crisis turns out to be another short-term flare-up or turns into something much bigger like a war between Israel and Iran. That's unlikely, but today's conflict will only escalate the tensions between these two adversaries. The price of oil may be a good way to asses the likelihood of a broader conflict (chart). It has been weak in recent days following Q3's spike higher.