From Moon of Alabama, June 23:
Today the Saudi ruler issued an ultimatum to Qatar that was written to be rejected. Such has happened before and one should not forget the lessons to be learned from it.Here's a January 2013 post recounting that 1990 stock market action:
After the crown prince of the Austia-Hungary monarchy Archduke Franz Ferdinand, was shot and killed in Sarajevo the government of Austria waited three weeks to issue a 10 point ultimatum to Serbia which it held responsible for the incident. At least three of those points concerned the suppression of "propaganda against Austria-Hungary" and the Austrian Monarchy by private and state entities. It demanded a response within two days:
Sir Edward Grey, the British Foreign Secretary, commented that he had "never before seen one State address to another independent State a document of so formidable a character."The Austrian ultimatum was an offer to be refused. But Serbia did not fall into that trap. It conceded on everything but two minor points. This was to no avail. The issues and plans Austria had were not about the assassination of [the disliked] Franz Ferdinand or the demands issued in the ultimatum. Two days later Austria-Hungary declared war against Serbia. Allies jumped to either side. World War I had started.
The now official demands by Saudi Arabia, the United Arab Emirates and some minor Gulf sheikdoms against Qatar have a similar smell to them. They are also "an offer to be refused."
The demands come late, three weeks after Saudi Arabia first accused Qatar of "supporting terrorism", three weeks after it closed the border and laid siege on the country.
(Qatar is surly "supporting terrorism". So is the U.S. - the U.S. Citizenship and Immigration Services just rejected an asylum request because the person in question has relations with the Free Syrian Army which the C&I-Service considers to be an "undesignated terrorist organization". The CIA built and supports the FSA. According to the U.S. government the U.S. government is a state sponsor of terrorism. But the biggest terrorist sponsor of all are and have been the Saudis.)
Spats between member of the Gulf Cooperation Council are usually mediated by the U.S. government. But without any official demands issued against Qatar there was nothing to mediate about. Three day ago U.S. Department of State finally issued a rather angry statement towards Saudi Arabia:
"We are mystified that the Gulf states have not released to the public, nor to the Qataris, the details about the claims that they are making toward Qatar," explained State Department spokesperson Heather Nauert on Tuesday.The real issue for Saudi Arabia is the support for the Muslim Brotherhood by Qatar. The MB provides an alternative model of Islamic government to the hereditary kingdoms of the Gulf sheiks. They are a danger to the Saudi ruling family. A second point are Qatar's relative good relations with Iran, the external enemy the Saudis (and Israeli) rulers need to keep their people in line....MORE
"At this point, we are left with one simple question: Were the actions really about their concerns about Qatar's alleged support for terrorism, or were they about the long-simmering grievances between and among the GCC countries?" Nauert asked.
Raymond James' Jeff Saut: Best Stock Ideas for the Next 3 to 5 Years
I don't have the guts to make five year projections as:
a) right now naming names that far in advance seems like a cross between wishful thinking and necromancy.
b) I am ever alert for the opportunity to lose 25-50% of AUM and the most likely way for that to happen is a shootin' war: India-Pakistan; China-Japan; Israel-Iran or some combination of the above. Predicting we'll be war free for five years seems like a longshot.
2999.75 was the closing high for the DJIA on July 16, 1990.
On July 17 we had the exact same closing print and I pointed out to an old-timer “Hey we almost closed at 3000″.
His reply: “Yeah, but we didn’t, I’m going short”.
From the New York Times:
Dow Ends at 2,999.75 With a Rise of 19.55
That of course was the pre-Gulf war (I) high, sixteen days later Saddam invaded Kuwait.
By ROBERT J. COLE
Published: July 17, 1990The Dow Jones industrial average flirted yesterday with a close above 3,000, but it ended the day just shy of that benchmark. Stock market analysts contended nevertheless that the performance indicated that stock prices still seemed to be climbing, at least for a while longer.
Although it failed to close above the 3,000 barrier, the blue-chip index climbed to its third new high in three trading sessions, advancing 19.55 points, to 2,999.75, just 25-hundredths of a point short.
Analysts expressed strong confidence that the Dow, which traded above 3,000 at several points during the day, would soon close that high. How soon, they said, was difficult to say....MORE
Less than three months later the market had dropped 21% and I found myself saying "Hmmm".
So I leave it to others to be gutsy on specific names....
The last time we saw something similar in the Dow was in the Spring of 2011 when the closes were:
April 29 12,810By September 2011 the market was down 13%.
May 2 12,807
May 3 12,807
Something to be aware of.