This past week saw several of the currently underway global crises escalating while the French broke with the populists across Europe in their parliamentary elections. In the Middle East, the crisis between Saudi Arabia’s allies and Iran’s proxy Qatar and allies escalated as it expanded into into Syria with Iranian missile strikes against Syrian targets. The United States also shot down a Syrian government (Iranian-backed) warplane in an international incident.
As Brexit talks finally got underway in Brussels today, British Prime Minister Theresa May reeled from one political blow after another in London. The so-called “most difficult negotiations in history” are underway with no clear position established from the politically weakened U.K. government and ruling Conservative Party that wants a hard Brexit but is torn by strife with its now-defunct Parliamentary majority. This could very easily lead to the hardest Brexit arrangement of all in no deal being approved by the British Parliament.
In France, Emmanuel Macron won his parliamentary majority he had coveted with the lowest French General Assembly voter turnout of all time. This turnout was even ten percentage points below than the prior record low. Macron is now under enormous precious to deliver the reforms he promised. If he can not bring healing to the half the country that voted for greater French autonomy and anti-EU parties in the first election round, then analysts are already predicting the triumph of one of the extremist parties in the next French presidential election in 2022.
If you ever needed motivation to hold on to your gold, you have it now from practically every inhabited continent. Gold is your best historically proven hedge and portfolio safeguard in a world seemingly going to geopolitical pieces. Time to review the IRA rollover rules and regulations and to brush up on how to invest in gold.
Middle Eastern Crisis Escalates Further With Iran Firing Missiles and U.S. Shooting Down Syrian Warplane
This weekend on Sunday, Iran escalated the growing Middle Eastern crisis that these days centers on Qatar. In a show of force targeted at Syria but clearly meant for regional rival Saudi Arabia, the Revolutionary Guard Corps launched a raft of six surface to surface missiles at various Islamic State targets throughout the war-ravaged Syrian countryside.
They claimed the strikes against logistical sites, command centers, and suicide car bomb factories 435 miles (700 kilometers) away in the Eastern region of Syria were a retaliation for last week’s brutal terrorist attacks in Tehran claimed by ISIS. This missile strike was an unusual assault from the Iranian leadership which demonstrated their clear willingness and ability to project their growing military power into the other conflicts of the region as and when they wish. Revolutionary Guards Spokesman Brigadier General Ramezan Sharif claimed:
The missile operation “is just a very small part of the capability of Iran’s punitive force against the terrorists and its enemies. Regional and international allies of the terrorists must understand this missile operation is a warning message.”
Previously the Iranian leadership had hinted that they were convinced their bitter enemies the Saudis and the Americans were behind the June 7th assaults on the mausoleum of their former Supreme Leader Ayatollah Ruhollah Khomeini and the Iranian parliament that killed 17 individuals. Ultimately this latest struggle is a part of the Saudi Arabian headed coalition against Qatar, Iran’s chief proxy state on the Persian Gulf.
In a sign these tensions may only be escalating more, the conflict that spilled over into Syrian culminated in a U.S. military shooting down of a Syrian government SU-22 warplane Sunday night as it dropped bombs near and wounded members of the militia group the Syrian Democratic Force (the SDF) that the Americans are backing. The Syrian government is a principal ally of Iran and Russia, both of whom are on the opposite sides of the United States in the five year plus still raging Syrian Civil War. Amir Handjani of the Atlantic Council Research Center warned the latest Arab-Iranian conflict flashpoint, the Iranian intervention in Syria, represents:
“a message to the Saudi-led alliance that ‘our missiles have the range and the accuracy to strike anywhere in the region’.”
This escalating crisis in the Middle East both in the Syrian and Qatari theaters are dangerous powder kegs waiting to explode. You should watch them carefully.
Brexit Talks Finally Begin With PM May Pressured for Softer Brexit Divorce
Even as the United Kingdom reeled from continued terrorist attacks and a tragic apartment building consuming fire, Prime Minister May pressed on to finally start up the Brexit talks in Brussels today. This was nearly a year on from when the Brexit referendum occurred last late June. The Europeans were already complaining that the British do not have a clear position on what they want out of the so-called divorce.
United Kingdom Brexit Secretary David Davis has appropriately called these talks the “most complicated negotiation of all time.” Since Prime Minister May’s efforts to strengthen her negotiating position ultimately blew up Brexit and her Parliamentary majority less than two weeks ago, she is now living what some analysts have called the Brexit nightmare she warned the electorate about during the parliamentary election campaign.
May must now appease both the hard-core Brexiteers of her Conservative Party (who could either topple her as leader of the party or scuttle her final deal if they are unhappy) as well as the ministers who wish to reshape her final strategy to one of safeguarding British free trade with their largest trading partner and market instead of regaining control over laws and immigration from the EU. Head of U.K. public policy at Clifford Chance, Phillip Souta, cautioned:
“The election result increased the probability of extreme outcomes. If there’s going to be a deal, it makes it more likely to be softer than before the election, but on the other hand the probability of no deal at all has increased.”
The negotiations are taking place as the deteriorating national mood in Britain has led to a rising domestic crisis amidst a string of incidents ranging from terrorism in Britain to anger over the government handling of the West London apartment tower inferno. Meanwhile the Brexit chief negotiator from Britain is attempting to regain control over British sovereignty without destroying their economy in the process.
The EU is negotiating from an opposing point of view that they must maintain EU stability and strength in the face of a key member leaving so that they can discourage other countries from withdrawing from the block under the leadership example of Britain.
EU Chief Brexit Negotiator Michael Barnier will be engaging in once a month in-person meetings with David Davis. Brexit champion and Foreign Secretary Boris Johnson stated as he was heading into a foreign ministerial meeting in Luxembourg that:
“The most important thing now is for us to look to the horizon, raise our eyes to the horizon, think about the future, think about the new partnership, the deep and special partnership that we want to build with our friends. In the long run this would be good for the U.K. and good for the rest of Europe.”
Both business leaders and investors are closely watching the outcomes of these critical negotiations. A range of banks, among them Goldman Sachs, have promised to move jobs to the EU from London regional hubs if they anticipate that the block access becomes jeopardized by the results.
Macron Wins Parliamentary Majority With Lowest French Voter Turnout Ever
President Emmanuel Macron wisely chose not to publically celebrate his hollow election victory Sunday night after winning a significant General Assembly majority on an all-time record low turnout in Fifth Republic French election history. His Republic on the Move and their allies claimed 350 of the 577 seats in the National Assembly. While this provides them with the largest French parliamentary majority from the past fifteen years, it comes with a record number of French refusing to participate in the democratic process in protest of the urgent problems facing France and the 39 year old new president of the French Fifth Republic.
Many analysts have focused on the fact that the 42.6 percent voter turnout means that Macron does not really have a mandate to govern, though the rules of the system give him nearly unlimited power to force his revolutionary pro business and pro EU agendas through despite the fact that this turnout represented over 10 percentage points lower than the prior record low. It was another stark reminder that nearly half of the total vote from the presidential election first round were for those candidates (like Marine Le Pen) against the free markets and anti open borders that the EU represents and Macron himself espouses.
Macron now faces five years of time to convince the legions of angry French voters that he can help them and France before they turn to the other radical choices. The anti-euro leaders of the far right and far left Marine Le Pen and Jean-Luc Melenchon each gained first time seats in the General Assembly which will provide them with strong platforms from which to continue growing their populist supports and strategies. This graphic displays the makeup of the new General Assembly for 2017:
The second biggest block in the new General Assembly is the center-right Republicans and their 113 seats. Meanwhile Francois Hollande’s once-mighty socialists have been devastated with a mere 29 seats remaining from their prior General Assembly majority. History Professor Jean Garrigues of the University of Orleans put the empty triumph of Macron into perspective, with:
“What’s at stake is much more than whether Macron can be re-elected. The entire political establishment of France will live or die by this. If Macron doesn’t succeed, then the next political response to the people’s anger will come from one of the extremes.”
These are dire words from one of the world’s most stable and wealthiest democracies (G7, UN Permanent Security Council Member, and NATO stalwart) and great world powers. It is a stark reminder for you that you can not count on the politicians or even central bankers of the world to save your retirement portfolio going forward. Only the yellow metal has a historic track record for accomplishing this. Gold offers protection and insurance during market turbulence for both your investment and retirement accounts.