Cowboy and Street Thug

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Back in March is posited the following: China and Commodities Will Recover First

It was harder to make money under the cowboy but the new guy is so predictable that this is like taking candy from a baby. No wonder Wall Street loves him and no wonder they supported his election.

The cowboy operated under UN Resolution 1441 and there was no doubt what the end game would be: If the United Nations was to have any credibility then American blood would have to be sacrificed. He wasn't a smooth talker but there was no doubt about his willingness to step into the street for a gun fight. UN Resolution 1441 authorized military action against IRAQ and he took it.

Today we have the new guy. And, we have IRAN. Everthing was fine with a the December 2009 deadline on nuclear ambitions but the new guy decided to publicly move the deadline up to September. There is no UN Resolution that IRAN comply with this on any date! We are mano y mano now baby!

What happens in September?

(a) Will IRAN suddenly capitulate to the United States?

(b) Will the US attack IRAN, without a UN Resolution allowing such, because they didn't meet the September deadline ?

(c) Will the US have its surrogate ISREAL attack IRAN so the US can save face?

(d) Will IRAN ignore the US demand thus allowing a smoother talker of nuance, to point out the differences between cultural calendars and timekeeping that were no doubt at the heart of a timing snafu?

Given that (a) isn't going to happen all the remaining options are financially destablizing with a commensurate "flight to safety" to follow. With US Treasuries increasingly doubtful as "safe" given US government insolvency, some money will go into commodities and China. The dollar will collapse either because the US cannot fund another war, properly pay its surrogates, and/or lose its standing as a world leader.

I continue to like DBA, DBB, DBC, DBO, FXI and GLD.