If The Iran War Escalates, These Assets Will Go Up The Most

0:00Hello, everyone. The United States and our allies began bombing Iran over the weekend. So today I'm going to explain exactly what is likely to happen across financial markets to various asset classes. We're live today from the desk of Anthony Pompliano.

0:22Before we get into today's episode, I need your help. My goal is to get to 1 million subscribers on YouTube. We currently have 44 ,565 subscribers. Hit the button and let's get into today's conversation. All right, ladies and gentlemen, the United States of America is on a generational run to start the new year. We sent Delta Force down to Venezuela and we grabbed Nicolas Maduro in the middle of the night. We then helped the Mexican military take out the world's most important cartel leader just a couple of weeks ago. And then us and our allies bombed Iran over the weekend and we successfully eliminated Iran's supreme leader.

0:53Like I said, it's a generational run. But now I've been to war, and so I understand how ugly these situations can get. I'm praying for the safety of every single American service member, along with all the innocent citizens of Iran. Things appear to be quite chaotic and uncertain at the moment, and so hopefully this conflict will be over sooner rather than later. Now, this decision to bomb Iran, it carries a ton of significance for the president and his administration. Not only are American lives at risk, both internationally and domestically, and at least three American military members reportedly have already been killed.

1:24But the president risks losing the support of the American people if things don't go well on a short timeline. Michael Knowles explained this well. Take a listen. If this goes south, President Trump is risking not only his foreign policy credibility, but perhaps his whole presidential legacy in precisely the way George W. Bush did. However, if this works, if the United States ousts the Ayatollah, who has been an enemy of the United States since the regime took power in 1979, if the United States succeeds in regime change in Iran and helps to bring about a more pro-Western and more popular regime there, this will be the greatest foreign policy accomplishment of any president in our lifetime since the end of the Cold War.

2:08So all of that to say, we don't know what's going to happen, and anyone who tells you what's going to happen tomorrow or the day after in a war is lying to you or ignorant. However, the one thing we know with certainty is the stakes could not possibly be higher for the White House. Now, before I explain how this new conflict is going to impact financial assets, we got to understand why is the United States making this move? What is the geopolitical chess move here? Well, Secretary of State Marco Rubio was on television recently, and he explained why he believes that the Iranian regime had to be addressed.

2:41Take a listen. But if what they want is a secret program buried in the mountain where no one can see it and inspectors can only come when they say they can come, if that's what they want, then they're going to have big problems. Because this is a dangerous, violent, radical regime. Not the Iranian people. We have no problem. We didn't hit Iranian people last night. We hit nuclear facilities. And if what they want is some secret program that looks nothing like the civil nuclear programs around the world, that looks a lot like you're trying to build a bomb, they're going to continue to have problems, not just with us, but with many other countries in the world.

3:14Anthony Pompliano:Problems like what? What do you mean? Like the problems they're facing right now. Listen, why do we have bases in Saudi Arabia and Kuwait and Qatar and UAE? All of those bases are there to help protect those countries from Iran. Why did Hezbollah exist? Because of Iran. What does Hamas exist? Because of Iran. How do the Houthis exist? Because of Iran. Who built the IEDs that maimed and killed American soldiers in Iraq? Iran. They're behind every problem in this region. They are the source, the sole source of instability in the entire Middle East, and the world's been paying a price for this for 40-something years.

3:46Imagine those people having a nuclear weapon, just one, just one nuclear weapon, or even the capability to be on the threshold of having a nuclear weapon. That's what the world was facing. That is unacceptable. President Trump did the world a favor last night, and now Iran should sort of wake up, the Iranian regime should wake up and say, okay, if we really want nuclear energy in our country, there's a way to do it. That offer is still there. We're prepared to talk to them tomorrow and start working on that. Steve Woodcoff has traveled extensively around the world trying to reach that deal with them, but they play too many games.

4:17They play way too many games, and now they've found out. Now, with all that said, my job is not to comment on geopolitics. My job is to help investors understand what is happening in the world and how these developments could impact your investment portfolio. So here's how the current chaos in the Middle East is likely to affect each asset class. First, crude oil should go sharply higher. Iran is a major oil producer and it sits along the Strait of Hormuz. That's the choke point for about 20 % of global oil supply. And so any military conflict that happens in Iran, immediately prices are likely to go higher because of a supply disruption risk.

4:53Now, Reuters put together a great explanation of the impact on global oil markets. Take a watch.

4:57Anthony Pompliano:Around 20 % of global oil and gas supply goes through the strait. Global oil prices could rise dramatically if Iran decides to block it, with financial analyst groups estimating the price of an oil barrel could jump by 50 to 70%. This would cause inflation to spike, with dire consequences to the world economy. Now, when it comes to U.S. equities, those are likely going to go lower in the short term. Warren introduces massive uncertainty around corporate earnings, consumer spending, and economic stability. And that all causes investors to immediately and rapidly want to de-risk by selling stocks.

5:37That pushes the stock prices lower. When it comes to gold, that should go much higher because gold is the quintessential safe haven asset. And it's also an asset that is built for geopolitical conflict, especially involving a major military power like Iran in the United States. And so this triggers a classic flight to safety bid for gold, which pushes it higher. When it comes to U.S. treasuries, we're likely going to see higher prices and lower yields. Investors flee risky assets and they move into U.S. government bonds. Remember, those are the world's deepest safe haven market. And so this drives prices up and yields down in a textbook risk-off move.

6:11As for the U.S. dollar, you should expect a move higher. The dollar strengthens during global crisis because it's the world's reserve currency and the ultimate liquidity destination when fear spikes. This is known as the dollar smile effect. When it comes to everyone's favorite asset, Bitcoin and crypto, Unfortunately, we're going to have some short-term headwinds because of the Iran situation. Despite the digital gold narrative, crypto historically trades at a high beta risk asset during acute geopolitical shocks, like right now. And so it falls alongside equities as investors rush to traditional safe havens like treasuries and cash.

6:42Now, another area to pay attention to is international equities. You should expect those to go lower generally, but there will be a few exceptions. Global stocks sell off on contagion fears and risk aversion all the time when we have these conflicts. But oil exporting nations like Saudi Arabia and UAE, those are likely going to outperform while oil importing economies, Japan, India, and Europe, they should get hit harder due to surging energy costs. In the real estate market, you can expect to see significant negative pressure. Rising oil prices fuel inflation expectations, and that pushes mortgage rates higher while geopolitical uncertainty dampens consumer confidence and big ticket purchase decisions become few and far between.

7:21And then lastly, the industrial commodities. These are going to be very confusing because there's likely to be a mixed reaction to the current events. For example, energy-linked commodities, petrochemicals, fertilizers, et cetera, those should spike on some sort of supply fear. But demand-sensitive metals, copper, steel, et cetera, they could face downward pressure from expectations of slower global economic growth. So where exactly do we go from here? There's going to be a lot of uncertainty. There's going to be a lot of volatility. My challenge to each of you is to please remain safe. There are many threats, both foreign and domestic, that are worth paying attention to.

7:56It's unknown how many sleeper cells in the U.S. could be activated because of these attacks in Iran. But as an investor in your portfolio, there's going to be significant volatility, and that's going to happen over weeks and months to come. It's easy to get caught up in the chaos, but my best advice is to stay focused on the long term. Focus on the resiliency of your portfolio. You can look for short-term opportunities to exploit if mispricings present themselves, but very few people are well-positioned to be a day trader. You're an investor, as am I. Just stick with a long-term plan, and you're likely to do just fine.

8:28Nobody likes global conflict. War is an ugly, nasty thing. People are going to lose their lives on all sides of this conflict. I am praying for every single American service member, every single citizen of the United States, and every single innocent civilian that sits in Iran. Hopefully they can achieve freedom and they remain safe as well. You as an investor have a very tough time coming. We have the risk of deflation in the economy. We've got asset prices that have a big headwind and there's going to be volatility. Keep your head on a swivel because things are going to be very tough. But those of you who can look past the short term, stay focused on the longterm, you're going to be all right.

9:07That's it for today's show. Thank you guys so much for watching. Please remember to subscribe on YouTube and I'll see you all live tomorrow from the desk of Anthony Pompliano.