There have been many headlines to come out of Iran in recent days, so we want to make it easier to digest.
Timeline of events thus far:
Friday, January 3rd, 2020: Top Iranian general, Qassem Soleimani, killed by a drone strike outside Baghdad’s international airport.
Sunday, January 5th: In retaliation for Soleimani, Iran announced they would no longer abide by the 2015 nuclear deal. According to their statement, they would no longer observe limitations on its capacity for uranium enrichment, the level of enrichment, the stock of enriched material or R&D.
The same day, hundreds of thousands of Iranians gathered to mourn Soleimani. The crowds were so big that Iranian state television reported that 56 people were killed and more than 200 were injured in a stampede.
Wednesday, January 8th: Iran retaliates in full, firing missiles at US bases in Iraq. Iran fired more than a dozen missiles at the bases. Luckily, there were no casualties, despite some misinformation that initially came after the attacks. When the attacks were feared to be more serious, Dow Industrial Average futures were down more than 400 points, before erasing the losses during the regular trading session.
Additionally, on Wednesday a Ukrainian passenger jet crashed. Later, Iran admitted to shooting down the jet, blaming it on “human error and US adventurism”, per CNN.
Thursday, January 9th: Tensions seemed to ease on Thursday, as both countries indicated they had no intention to escalate the situation. Iran’s UN ambassador told NPR that Tehran had “no plans to step up a confrontation with the US” after they fired missiles upon the base the previous night.
An Iranian military commander stated that day that they did not intend to kill anyone during their retaliatory strikes, further showing signs that the situation wouldn’t escalate.
Friday, January 10th: The US justified the attack on Soleimani by stating that he was targeting four US embassies. Secretary of State Mike Pompeo stated in a press conference on Friday that he was an imminent threat to our country. The statements somewhat contradicted a previous statement from Secretary Pompeo when he said, “We don’t know exactly when and we don’t know precisely where, but it was real.”
Saturday, January 11th: Crowds of protestors started to rally against the Iranian regime after they admitted to shooting down the Ukrainian jet. What started out as a candlelight vigil in honor of the victims of the plane crash turned quickly into a full-out protest against the regime, with chants of “death to the dictator” and “resignation is not enough, a trial is needed”, per Bloomberg.
Despite some inconsistencies from our government, Soleimani was not a friend to the United States. Despite that, some unintended consequences may occur due to the assassination. There are around 5,000 US troops deployed in Iraq with the goal of eliminating ISIS and groups like it in the area. Iraq specifically asked the US not to target Iran from within their country, a deal that has been violated due to the attack on Soleimani, per Politico. With Iraq ordering the US to be withdrawn from the country, it could severely jeopardize the mission in the region.
On top of that, Soleimani is believed to have been a vital part of the reason Iran and the US collaborated to fight the “Axis of Evil” after the attacks on 9/11. Soleimani continued to occasionally collaborate with the US in the fight against ISIS, most obviously demonstrated in one of ISIS’ biggest defeats in the 2014 Siege of Amirili, per Ozy. Soleimani’s skill in being both “friend and foe to the US” led many to believe he was the most skilled general in the Middle East, per the article.
Much has happened since the killing of Soleimani, but what is clear is that this isn’t the last we’ll be hearing about the situation. Markets will be taking notice and have been especially sensitive to headlines from the Middle East in recent days.
Jobs Report Comes in Soft
The jobs report Friday wasn’t the level investors and economists expected. The bright side? Unemployment remains at a 50-year at 3.5%.
According to Bloomberg, nonfarm payrolls rose 145,000 in December and November’s adds were downwardly revised to 256,000. Not only did the December fail to reach the economist estimate of 160,000 nonfarm job adds, it also was the slowest job growth since May. On top of that, wages rose at the weakest annual pace since 2018, increasing by 2.9% from the previous year.
Interestingly, WSJ reports that women surpassed men in the workforce for the first time in a decade, per the report. Women surpassed men by 109,000 jobs.
Nancy Tengler of USA Today makes the argument that the jobs report shouldn’t derail the market and investors should, in fact, be happy about the report. Her argument centers around the fact that the consumer is still spending, inflation is relatively low so the small wage gain shouldn’t discourage the consumer and since job growth isn’t overwhelming it will likely keep the Fed from raising rates.
Taking in isolation, one subpar jobs report isn’t enough to derail this market or economy. Despite that, the overhangs continue to grow in the market. The consumer is one domino that can’t fall if we want to continue the expansion.
Articles of Impeachment to Move to the Senate
Speaker of the House Nancy Pelosi announced on Friday that she will send articles of impeachment to the Senate this week. It’s widely expected that Pelosi’s contemporary in the Senate, Senate Majority Leader Mitch McConnel, will start the impeachment trial shortly after he receives the articles, per Politico. McConnell wants to use the same process as the Clinton impeachment trial, postponing witnesses until after the House has presented their case against the President. That will be followed by a response from the president’s legal team, per the article.
A few Republican Senators, namely Susan Collins of Maine and Mitt Romney of Utah, have made their intention for additional witnesses to be called during the trial. This plays into Pelosi’s hands over her reasoning for delaying the Senate trial.
Despite the theatrics of the situation, this will likely end in the President being acquitted. The Republican majority in the Senate is too great to overcome for the Democrats. On top of that, Republicans have been hesitant to break ranks from the President during the process. The only thing that could cause the Senate to decide to remove the President from office is something so explosive in new witness testimony that they would be forced to remove (on the premise that witnesses are even called for the Senate trial).
Fires are still ravaging Australia. The plume of smoke over Australia is almost twice the size of the continental United States and the damage the fires are doing to both the terrain and ecosystems in the country is truly devastating. Thus far, 27 people have been killed and over 2,000 homes have been destroyed. The fires have burned more than 18 million acres, according to the New York Times. On top of all that devastation, a professor estimated that over a billion animals have died thus far in Australia’s wildfires, including 25,000 koalas. Many of these species can’t be found anywhere else in the world.
Kate Umbers, a biologist at Western Sydney University, said the fires are “deeply, deeply troubling – far worse than anything I’ve ever experienced in my life. It’s really quite frightening in an ecological sense.”
The reality is that we may never know the full extent of the damage the fires have had on the wildlife in Australia, which is heartbreaking. We wanted to provide a link to The Cut that further explains the situation in Australia.
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