Friday, August 21, 2009

Art Cashin's Strange Comments

If you've heard Art Cashin's market commentary on CNBC over the last week, you heard this no-nonsense, level headed, highly respected and followed analyst go on about some "esoteric" things coming together at Ramadan, the Muslim month long fasting observance that starts August 22, and how that will cause some "historic trading" in the stock market (to the down side). Is he off his medication?

As near as I can tell, his comments derive from some of his wide network of sources and are explained by what he writes in his column and, if you read the linked info, it would obviously be referring to an Israeli strike on Iran's nuclear facilities. The rumor mill has covered 4 of the last 4 strikes on Iran, none of which has happened. I've followed this a little, and I get the impression it nearly happened as the Bush/Cheney years came to a close last year. But the economic crisis may have stopped it. But newspapers recently have reported things like Israel ordering 100 LJDAM bunker busters earlier this summer and asking for approval from the Obama administration for a strike while the riots were going on after the recent elections in Iran. They reportedly were rebuffed and the strike was shelved.

Things have been fairly quiet in the Middle East after the 2006 Lebanon fighting, but observers are saying things are getting tense again. The regime in Iran is booting out anyone who wants to recognize Israel's right to exist. The G8 has set a September 20 deadline for Iran to come clean with its nuclear program or face serious consequences. Israeli intelligence does not believe other sources on Iran's nuclear bomb making schedule, believing that they may be capable of bomb making next year. Israel is not going to wait around for that.

The investment implications of this event, whenever it happens, are "historic" as Art says. It would imply treading somewhat lightly on the rest of the current rally if it is going to be a near term event, and maybe a healthy weighting in oil and gold/silver. Oil looks like it wants to break out and climb with the recovering global economy, so it may climb slow or fast depending on whether a strike happens. As for stocks, profit taking and cash building is probably better right now.

1 comment:

  1. Dear Bruce,

    Thank you much for your well-written post. I have been puzzled by his several references to Ramadan & the stk mkt. I started searching via Google for an explanation & yours is the best by far.

    I just hope that it doesn't happen til after Monday's opening because there is a position that i wanted to open even before i read your post.