IAEA report expected to confirm Iranian nuclear arms research

Posted By Mary Casey, Tom Kutsch Monday, November 7, 2011 - 8:25 AM Share

IAEA report expected to confirm Iran nuclear arms research

The United Nation's International Atomic Energy Agency is set to release a report this week evaluating the status of Iran's nuclear capabilities showing that Iran is within reach of attaining a nuclear weapon. According to U.S. officials the report will confirm suspicions that Iran continued nuclear arms research after 2003, when pressure to halt experiments was heightened. While Iran's Foreign Minister Ali Akbar Salehi maintained the reports are based on "counterfeit" claims asserting the nuclear program is solely for peaceful purposes, Iranian President Mahmoud Ahmadinejad stated Iran's military technology is advancing to be on par with Israel and the West. He said, "Yes, we have military capabilities that are different from any other country in the region," continuing on to say "Iran will not permit [anyone from making] a move against it." His remarks have come as speculation has increased over a possible Israeli attack on Iran's nuclear facilities. Israeli President Shimon Peres said an attack is becoming "more and more likely." Russia responded to this threat stating that a preemptive military strike would be a "very serious mistake fraught with unpredictable consequences."

Headlines

The death toll has reached 23 in Homs as the opposition Syrian National Council appealed to the U.N. and Arab League to send observers for "international protection of civilians."
Three bombs exploded in a Baghdad market on the first day of the holiday Eid al-Adha killing 10 people.
The Israeli navy boarded two humanitarian aid boats bound for Gaza and rerouted them to the Israeli port of Ashdod detaining the activists in Tel Aviv.
Israel denied that the hacker group, Anonymous, was responsible for a cyber attack on Sunday that brought down the websites of the IDF, Mossad, Shin Bet, and other government ministries.
Yemeni forces killed six al-Qaeda linked militants in the southern province of Abyan.

Daily Snapshot

Thousands of Muslim pilgrims arrive to throw pebbles at pillars during the 'Jamarat' ritual, the stoning of Satan, in Mina near the holy city of Mecca, on November 6, 2011. Pilgrims pelt pillars symbolising the devil with pebbles to show their defiance on the third day of the hajj as Muslims worldwide mark the Eid al-Adha or the Feast of the Sacrifice, marking the end of the hajj pilgrimage to Mecca and commemorating Abraham's willingness to sacrifice his son Ismail on God's command (FAYEZ NURELDINE/AFP/Getty Images).

Arguments and Analysis

'Why the past is crucial to Egypt's future' (Michael Wahid Hanna, The Cairo Review)

"The fate of former regime figures will be an important test of the supremacy of civilian authority and Egypt's commitment to the social movement that toppled the Mubarak regime. Prosecutions and vetting of the guilty among the felool [remnants of the regime] will be essential steps in the elucidation of past repression and the construction of a new and open politics. However, the process of accounting for the past will require systematic and creative commitment that goes beyond individual culpability of former regime figures. In this regard, truth commissions, historical archives, victim compensation, and other steps could be important complementary measures in the near future. There is no acknowledged or universal formula for transitional settings and Egypt will need to tailor its own course in line with its history, culture, and society. The creativity and resilience of Egypt's protest movement offer grounds for cautious optimism in this regard. However, the sense of moral authority among the most committed protest leaders should also be a warning sign as to the potential for excesses and truncation of due process in the pursuit of revolutionary justice."

'Rising up in Israel' (Eyal Press, New York Review of Books)

"Netanyahu surely hopes that by the time elections take place the paramount concern of most Israelis will once again be bitachon-security. But if the protests this summer proved nothing else, it's that many citizens are no longer waiting for elections to air their grievances or for their leaders to tell them what is important. When Knesset members dropped by the tents this summer to express their (belated) support, the reaction was cool. When the protesters were advised to go home after the violence in August, they refused, not because they didn't care about security but because the word carried a different meaning to them. "If we don't have health care, education, housing, a welfare system, we'll never have security," Stav Shafir said. "You need to have a strong society to have security, and right now our society is very weak."

'Qatar: pygmy with the punch of a giant' (The Economist)

"While cheerleading the Arab spring, Qatar has interposed itself, with mixed diplomatic success, in conflicts as far away as Lebanon, Palestine, Sudan, Syria and Yemen. Its sheikhs sit on an array of big European boards and own choice chunks of London. Their spreading portfolios embrace Chinese refineries, French fashion houses and Spanish football teams. In 2022 Qatar will host football's World Cup. Such clout carries a cost in controversy. Critics sniff that the global shopping sprees of institutions such as the ruling Thani family's investment arm, Qatar Holdings, along with the Qatar Investment Authority, a sovereign-wealth fund worth $70 billion, are a crude attempt to buy influence. Chastened dictators obviously resent what they see as Al Jazeera's meddling, whereas leftists, citing the presence of a giant American airbase just outside Doha, charge Qatar with being Washington's cat's paw. Arab liberals, meanwhile, look at the generous air time which Al Jazeera gives to Islamists and at the Qataris' enthusiasm for radical Islamist groups such as Hamas in Palestine and Hizbullah in Lebanon, and conclude that the emirate is promoting not popular revolution but a fundamentalist power grab."

Recent articles on the Channel

-- 'Kind of not quiet' by Ra'id Zuhair Al-Jamali

-- 'Keeping it in the family' by Jane Kinninmont

-- 'How Egypt's Muslim Brotherhood will win' by Shadi Hamid

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SHAHRIYAR GOURGI

11:22 AM ET

November 7, 2011

Israel/Iran dangerously close to confrontation: Ticker Trax

This week’s discussion topics

I. Israel and Iran dangerously close to confrontation
II. ..The economic problems....

First a quick note:

We started the Friday Ticker Trax column early last month and I must admit, I have struggled with a free content format that is useful. We have regular stock picks for the paid publication but in fairness to paid subscribers, I cannot be sending those out for free on a regular basis. We are however debating the idea of using this Friday column to present a couple specific stock picks each month. These would be at least a month old but if I felt the risk/reward was still attractive, they would be presented here. The other Friday would be used to present information that is hopefully educational or helpful to overall portfolio management.

I. Israel and Iran dangerously close to confrontation

I think we have all lost count of the number of times sabre rattling has occurred in this region. This past year it was relatively quiet but heading into November things are getting a bit ugly. Our struggling portfolios are dealing with economic uncertainty and problems in Europe(in particular see Italy below) so the last thing we need is a full-on confrontation in the Middle East.

There are definitely ways to profit from such a scenario (oil and gold) but for the most part an attack on Iran would dramatically destabilize the region and hit global stock markets very hard. You would need the oil and gold exposure to offset the volatility and if familiar with options, a good Put Option strategy.

This week in the midst of significant rumours of a winter attack on Iran, Israel’s military completed major offensive and defensive drills in Italy (planned for the past six months). This came at the same time as Israel was test firing a new long range missile capable of carrying a nuclear warhead. On Thursday in Tel Aviv they also did air raid drills to simulate a missile attack from Iran or neighboring countries.

The last similar missile test from Israel occurred in 2008 when a long range ballistic missile was tested. These are obviously designed to test the technology but also a significant amount of chest thumping comes along with it.

Iran is dangerously close to producing their first nuclear warhead and when the president of Iran has publicly stated in the past that Israel does not deserve to exist as a nation, you cannot blame the country for being concerned.

As most are aware, any attack by Israel (or a combined force from Britain, the United States, or other European countries) would likely result in a regional disaster. The President of Iran and his military leaders have pulled no bones about it - if attacked they would try to wipe Israel off the map within one week and would launch widespread chaos upon the oil facilities across the entire region.

On paper, Israel would want first strike to the nuclear power plant and production facilities. A coordinated force would need to immediately destabilize their military and portable missile launchers. On paper it looks fine but even from the perspective of Israel, how do you prevent thousands of small missiles from being launched into your cities from neighboring Lebanon.

No doubt President Obama has a pretty level head about this scenario but how do you reason with two wild cats locked in a cage (Iran and Israel). If Israel hits the point where they feel imminently threatened by Iran’s nuclear program (and that point is fast approaching) they will strike first to protect their people.

From the perspective of portfolio management in 2012, keep this scenario at the top of your watch list.

II. Italy may be anthrax to this market

So in case the threat of Iran and the problems in Greece have not been enough to keep you up at night, let’s throw in Italy. That wonderful country known for fashion, history, the Vatican, and amazing cities like Venice. Oh, and the fact that they are almost bankrupt and could make the problems in Greece look like chump change.

I won’t elaborate on Greece as you would need to live in a cave to avoid the media circus surrounding that country. Italy on the other hand is just lurking in the background. We have the PIIGS problem in general (Portugal, Italy, Ireland, Greece, and Spain) but Italy soon will take the podium at the Media Circus.

The economic problems in Greece threatened the Euro but Italy (ITA population 60 million) poses the risk of truly contagious banking problems and risk to the European Union.

What elevated Italy’s problems to the forefront this past week were the yields on the Italian 10-year bond. They surged well past a key 6% mark and while this seems like nothing important on the surface, it screams of country debt default risk.

In the short term the bond yield signals risk to European Union banks and emergence of a credit crunch. Credit in the region was already tight because of country debt exposure by major banks across Europe (France in particular).

From what I can understand of a very complicated scenario, a default by Greece would cause a rally in German bunds and push Italian yields even higher. This higher cost of borrowing in Italy then makes a bad economic situation for Italy and its people even worse. This then puts pressure on the ruling political party and as we have often seen, public protests and often riots – people seem to enjoy rioting lately but in Italy I am sure they do it wearing Gucci shoes and carrying Prada purses. It must be tough to riot when one is dressed so well.

The risks of contagion from Italy are dramatic. BNP Paribas alone carries 22 Billion Euro in associated debt. MF Global in New York went bankrupt this past week because of exposure to Europe and major Wall Street banks carry significant exposure.

The PIIGS are a messy bunch and hard to understand at times as the global financial system is incredibly intertwined. I don’t even pretend to understand it all. It is important regardless to have a general understanding of how these scenarios could impact your investment or retirement portfolio. Then plan accordingly or sit down with a good financial advisor to chart a course for 2012 based upon these potential threats.

And one last note – gold moves for many reasons and often as a flight to safety. Don’t necessarily assume that the gold stocks will rally if markets take a dive from European problems or escalated problems in the Middle East. Even when we watched gold run to $1900 this year, the small gold stocks did terrible. About the only guarantee would be a war involving Iran and the impact it would have upon oil (which would go through the roof). Under such a scenario it is very likely any good oil stocks (small or large) with decent production would do very well.

SHAHRIYAR GOURGI

11:26 AM ET

November 7, 2011

Nuke agency says Iran can make bomb

AP: Nuke Agency says Iran can make bomb - http://bit.ly/rUvqut ...from September, 2009.

SHAHRIYAR GOURGI

11:27 AM ET

November 7, 2011

http://seattletimes.nwsource.

http://seattletimes.nwsource.com/html/nationworld/2009887368_apeuiranandthebomb.html

WILDTHING

4:13 PM ET

November 7, 2011

no international law is the law

There is no international law after the Invasion of Iraq. and Libya and the drones over Pakistan.. any country who wishes to have a deterrance to massive conventional super-power has an interest in a nuclear deterance.. it is now Might Makes Right and we might not always have the power to be right in this world of our making as it progresses onward..

HERMANLENNON

2:45 AM ET

December 6, 2011

I think we have all lost

I think we have all lost count of the number of times sabre rattling has occurred in this region. This past year it was relatively quiet but heading into November things are getting a bit ugly. Our struggling portfolios beth jones are dealing with economic uncertainty and problems in Europe(in particular see Italy below) so the last thing we need is a full-on confrontation in the Middle East.