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Escalating Crisis in Iraq
Our top story of the week is the escalating crisis in Iraq, where the militant Sunni group known as the Islamic State of Iraq and the Levant, or ISIL, continues to press forward, destabilizing the fragile balance in the embattled country and placing the White House under further pressure. On Thursday, President Obama addressed the media, stating that he is prepared to send up to 300 U.S. military advisors to Iraq to assist in training and advising their forces.
In addition, the White House is prepared to create joint operation centers in Baghdad and northern Iraq. Pointed statements by the President that “targeted and precise military action” is still on the table suggests that air-strikes remain a viable option, although the involvement of ground forces has been officially ruled out.
This may ultimately fail to appease the United Nations, which on Tuesday reported that continued violence in Iraq could have deadly repercussions in Syria and catalyze a wider war in the Middle East. According to the New York Times, a U.N. panel stated that the conflict in Syria “has reached a tipping point threatening the entire region,” with the ISIL likely to seek greater involvement in the Syrian conflict, including an influx of foreign militants.
Despite disconcerting fundamentals that could suddenly collapse into complete turmoil, the global financial markets remain strangely robust, with the German DAX in particular eclipsing the 10,000 point barrier multiple times for month of June. Adding to the illogical ambience is the FIFA World Cup in Brazil, a financially troubled event in its own right which has served as a distraction to the very real problems that could culminate in our own backyard.
Inflation worries are now front and center in Wall Street, with the commodities sector making huge leaps after being kicked to the curb for most of last year. Rising food prices, particularly red meat and coffee, have absorbed much of the mainstream media’s attention while gas prices will obviously be a point of discussion considering Iraq’s huge crude oil production leverage.
Still, it appears that all anybody can talk about is the U.S. national soccer team’s victory over Ghana in the preliminary round of the World Cup and the possibility of the team making it to the knock-out stage in light of global superstar Christiano Ronaldo’s injury, a huge blow for Portugal ahead of its match against the U.S. Emblematic of this geopolitical dichotomy is a recent tweet by ESPN commentator, Taylor Twellman, who stated that he was proud to be an American after the conclusion of the U.S.-Ghana match. Unfortunately for the rest of us, if world affairs continue to devolve, there may not be that much left to be proud about.
Big News in Precious Metals
For now, the domestic equities sector have placed these concerns on hold, with the broad indices improving marginally, with the S&P 500 leading the way with a 0.13% move. The big news in the financial markets are the precious metals, with gold jumping 42-dollars to close at 1,320, while silver had the largest percentage gain, up 4-and-a-half percent against the prior. Palladium also benefitted from a strong one-and-a-half percent move, staving off a recent bout of technical weakness when it eclipsed multi-year highs. On the digital front, bitcoin regained the 600-dollar level after suffering some volatility earlier in the week.
And that will do it for this edition. Thanks for watching and we’ll see you next week!