MAXIN ADVISORS Weekly Market Review adresses the issues of the moment and our views for the markets ahead.
War in the Middle East
For many months now, we have been warning investors that the world geo-political scene was highly unstable and that the likelihood of a global conflict was extremely high. It was one of the key reasons why we remained short equities during the AI-driven speculative extension of April July 2023.
Military events come unannounced, but they are predictable..
We detailed then three sources of military escalation that could lead to major dislocations in the financial markets :
- An escalation of the War in Ukraine into a tactical nuclear war, something we still believe can happen at any time,
- A conflagration in the Middle East and,
- a military accident in the South China straits around the Taiwanese issue, the one on which we put the lowest probability of occurrence.
Yesterday deadly attack of Israel by Gaza-based Hamas is a major development that could have considerable consequences for the world stability and economies, potentially triggering a new regional war in the Middle East on top of the Ukraine war in Europe.
Precisely 50 years after the start of the Kippur war in 1973 and precisely 23 years after Lebanon’s Hezbollah militiamen captured Israeli soldiers in the Chebaa farms, leading to the 2006 war between Israel and Lebanon, Hamas, a radical Palestinian Islamic movement, qualified as a terrorist Group, operating in the Gaza Strip launched a deadly attack on Israel, firing thousands of rockets into vast areas of the Israeli territory, sending hundreds of fighters into Israel to kill and kidnap Israeli citizens, ultimately sending millions of Israeli citizens into shelters and the entire population of Israel in a state of shock.
In 24 hours, Israel has lost 1000 lives and 100 Israelis have been kidnapped, including military personnel and civilians, and the immediate retaliation by Israel has already caused 400 fatalities in the Palestinian population of Gaza.
The scope, magnitude and means of this deadly act of war has taken Israel and the world by surprise and the 6th October 2023 will probably mark a new era in the Israeli-Palestinian conflict.
For the first time in their entire history, Israeli citizens have been attacked, killed and abducted inside their borders. For the first time in their history, Israeli citizens feel unsafe and are doubting the ability of their highly-regarded Defence forces and Intelligence.
This is not an operation, this is not an incident, this is not an epiphenomenon…
In the words of Benjamin Netanyahu, Israel Prime Minister and his Government today,
ISRAEL IS AT WAR.
THIS IS A TRUE WAR THAT HAS POTENTIALLY CONSIDERABLE IMPLICATIONS politically, historically and economically. Global investors should not underestimate the possible consequences of its unfolding in October 2023.
Our regular readers and followers know that we spend considerable amounts of time on political governance and geo-political risks in our investment process.
In this article, we shall try to analyse the dynamics at play, the actors of the conflict, the scenarios that could unfold and their implications for the world financial markets.
But first we would like to extend our thought and prayers to all the victims, Israelis and Palestinians, of that new deadly burst of violence and their families, and state that whatever just any cause may be perceived to be by any of the parties, the use of blind violence, killings, kidnappings or widespread bombing against civilians is barbarian, criminal and cannot be accepted, tolerated or even justified.
The Israeli – Palestinian conflict
Having grown up in Lebanon, we were born and lived through almost all the phases of the Israeli-Palestinian conflict over the past 63 years, from the 1967and 1973 Arab Israeli wars, to the influx and parking of hundreds of thousands of Palestinian refugees in refugee camps, to the Jordanian – Palestinian conflict of Black September in 1970 , to the 1975 – 1991 civil war in Lebanon, to the Israeli invasion of Lebanon in June 1982, to the rise of the Iranian influence in Lebanon through the creation and funding of Hezbollah as a reaction to the Israeli invasion, to the 2006 Israeli-Hezbollah war in Lebanon, to the explosion of the Port of Beirut in August 2020, we have lived through all the wars, fightings, deaths, destructions, despair and hopelessness that this conflict has brought to the Middle East as a whole.
The creation of the Republic of Lebanon itself in 1926 was a direct consequence of the Balfour declaration of 1918 where the then British rulers of Palestine authorised the creation of a Jewish National Settlement on the Holy Land of the three main monotheist religions.
It was based on this major step in favour of the right of the Jews to establish in Palestine that the Lebanese Christians obtained from the Congress of Versailles at the end of the First World War and the demise of the Ottoman Empire, the right to “A Nation for the Christians and Minorities” in the largely Muslim Middle East : Lebanon.
The second World War and the atrocities of the Nazi regime led to a massive influx of European jews to Palestine immediately after the the war, and in 1948, the State of Israel was created by force against the will of the British rule of Palestine, finally giving the Jews of the world a Nation, after almost 2000 years of a perceived exodus following the destruction of the temple of Salomon and of Massadah in 70 AD by the Roman Empire.
The forceful creation of the State of Israel and events like Deir Yassine led to a first exodus of Palestinians from their homeland into neighbouring countries, creating, already then, a first generation of Palestinian refugees parked in camps for decades, with no rights, no hope, no future …
It also created a strong sense of injustice as the Palestinian People, who had consistently been under the rule of Arab Empires or Western rule have never been granted the right to their own Sovereign Nation while seeing what they rightly perceived as “immigrants” being recognised that right through the creation and acceptance of the State of Israel.
The feeling of injustice, coupled with the despair and hopelessness of hundreds of thousands of refugees parked in camps, adding to the very logic and structure of the State of Israel, a Jewish State for the Jews, with little room for the Arabs and other communities, fed, over seven decades, a powerful sense of resentment agains the creation of the State of Israel, and particularly its expansionary development through war victories and illegal settlements on Palestinian land.
It has to be said here that the Palestinian themselves have contributed to the development of the State of Israel through their inability to agree amongst themselves and accept the numerous peace plans and two-states solutions that had been put on the table on at least six different occasions, including at the 1993 Oslo Accords that paved the way for a Palestinian self-rule and ultimately.Nation and was ultimately rejected by the radical factions of the Palestinian people.
The choice made very early-on, mainly by the Palestinians refugees in camps scattered around the Arab world, to resort to the use of violence and terrorism to fight the State of Israel and reclaim their land did not help the realisation of peaceful solutions, in great part also, aided by the constant refusal of Israel to grant the Palestinian refugees a right to return to their homeland.
It also has to be said here, that contrary to the Israelis who have for most originated from European, Americans, Russian Nations or the middle class of the neighbouring levant and Maghreb nations, the Palestinians like all the people of the levant such as Lebanon, Syria or Iraq have a deeply entrenched cultural and educational mindset that is based on emotions rather than rationality, violence rather than collaboration, individualism rather than community which explains why all these Nations have never been able to thrive through democratic systems and have only thrived within dictatorial systems.
On the other hand, the religiously-driven community cohesion, culture of learning and hard work, ingrained culture of the rule of law and democracy allowed the State of Israel to thrive tremendously economically and socially, deepening the already deep divide between the two “populations” inhabiting the same land, and to acquire a technological and military superiority that explains their constant military victories over their neighbouring Arab countries. The unwavering support of the United States of America, where a quarter of the entire jewish population of the world lives, also helped tremendously even if, until Donald Trump, the official position of the United States of America has always been in favour of a Two-State Nations.
The irony of the situation is that the Palestinians that are fighting the Jews of Israel today are genetically the direct descendant of the semite – and therefore Jewish – populations that remained in Judea and Samaria after the destruction of the Kingdom of David by the Romans in 70 AD and converted to the religions of the subsequent dominant empires.
In recent years,
Three important dynamics developed on the internal and external geo-political scene :
1. With the constant influx of Ashkenazi Jews from Russia and Eastern Europe, the balance between Ashkenazis and Sefaradis ( Oriental jews that were always closer to the Palestinians culturally ) shifted, leading to a increasing religious and political radicalism within Israel itself that ultimately made compromises more complicated and have altered the political stability of the Nation. The divide of the Israeli population vis a vis the Palestine issue and the idea of Palestinian State grew to become irreconcilable and weak political coalitions took over from the charismatic and unifying leaders of the past decades.
2. Within the Palestinian Territories, the more moderate Fatah initially led by Yasser Arafat and now led by Mahmoud Abbas prevailed in the West Bank or “Occupied territories” of Judea and Samaria where collaboration between the Palestinian Authority and the Israeli State favoured the development of infrastructure, education, health and jobs, while the more remote Gaza Strip, a 40 km long by 10 km large enclave between Egypt, Israel and the Mediterranean Sea considered to be amongst the most densely populated area of the world with 2 million Palestinian has been governed by HAMAS, the radical Islamist faction that still has the destruction of the State of Israel as one of its strategic objective in its official charter and is considered to be a terrorist organisation by most Western nations. Gaza has an extremely young population with little access to economic opportunities, education, health or infrastructure and it is estimated that almost 80 % of its population lives in refugee camps and survives from subsidies from the International Communities. In the past decades, despair and hopelessness coupled with the inflammatory positioning of the HAMAS made it home to most of the Intifadas ( uprisings ) and fighting of the Israeli occupants.
3. Internationally, after decades of attempts at finding a peaceful solution, and under the auspices of Donald Trump and his son-in-law Jared Kushner, and following the destruction of two of the main Arab opponents to Israel, Syria and Iraq, the oil rich Arab Nations of the Gulf yielded towards a global peace plan – the Abraham Accords – that normalised their relationships with Israel without dealing with the Palestinian issue. The 2020 rapprochement of the UAE, Bahrein, Morocco and South Sudan, following the 1979 Peace treaty between Egypt and Israel, has been and is felt by the Palestinians as a treason to the cause of a Palestinian Nation, and frankly, the fine analysis of the Accord seems to reveal that the Palestinian issue has been shifted from a political Issue – the creation of a Palestinian State – to an economic issue – creating the conditions of the Palestinian people to live a decent life with access to economic development, investments, infrastructure, education and health, under the auspices of the Palestinian Authority and with the help of Israel and the Arab Nations. The development of NEOM, Saudi Arabia’s gigantic project at its Northern tip can also be seen as an attempt to provide an economic engine to that region that could provide job opportunities for the Palestinian populations of Gaza.
In the most recent months, and this may not be completely foreign to the timing of the current burst of violence at this particular stage, significant progress had been made to bring Saudi Arabia to the Abraham Accords, as a key, if not the major actor of the Arab World due to its religious and economic leadership.
To sum-up a preliminary situation on the Israeli-Palestinian Conflict as at September 2023, it could be said that the Palestinian cause and the Notion of a Palestinian State had shifted considerably over the past few years towards a global peace process between the Arabs and the Israeli at the expense of the political solution of a Palestinian State and with the objective of bettering the lives of all the inhabitants of the region through collaborative help between the Arabs and Israel.
But two main obstacles remained :
The handle of an extremist organisation HAMAS over the Gaza Strip and the despair and economic and human hardship of its population, on one hand,
The expansionary policies of the Israeli Hardliners in terms of illegal settlements on occupied Palestinian land.
The Actors of the Current conflict.
In the official words of Benjamin Netanyahu and of its Government ISRAEL IS AT WAR, but as the Israeli Ambassador to Paris made more precise, Israel is at war, NOT with the Palestinians, but at war with HAMAS.
… And this is a war that goes beyond the simple retaliation, vengeance or freeing of hostages, it is a war against what remains as the main obstacle to a global peace process in the region, a war against a terrorist organisation, a war against an Islamic Terrorist Group that has the stated objective of destroying the State of Israel and ultimately a war against the Palestinian extremist faction that prevents the Palestinian Authority from governing the entirety of the Palestinian Territories.
Israel cannot negotiate with HAMAS and cannot envisage a Palestinian State ruled by a group like HAMAS.
The coming war is about destroying HAMAS, not only its infrastructure or capabilities in Gaza or the West Bank, but actually eradicating the group based on Israel’s available intelligence. The coming war is about showing the Palestinians that any extremist group will be eradicated by force, be it as a high cost for Israel and even higher cost of the Palestinian populations…
The coming war is also about changing radically the situation in Gaza and removing the last obstacles to a global peace process in the region with the help of Mahmoud Abbas’s Fatah and Palestinian authority.
And HAMAS’ attack of the past weekend just provided Israel with the domestic and international legitimacy to enter Gaza militarily and clean it up at whatever cost, including the lives of the hostages.
It has also probably strengthened the political hand of Benjamin Netanyahu and re-unified the Israelis behind his Government…
or Harakat Al Mouqwama Al Islamiya – the movement of Islamic Resistance – was founded in Gaza by Sheikh Ahmad Yassin in 1987. It finds its roots in the Islamic philosophy of the Muslim brotherhood, Its charter declares Palestine a holy Islamic land and provides for the destruction of the State of Israel and the establishment of Jerusalem as the Capital of a Palestine in its borders prior to the 1967 war.
Hamas has engaged in many terrorist attacks in Israel awarding it the status of Terrorist organisation in Canada the US or Japan. Hamas is known to be helped technically by Lebanon’s Hezbollah and financed by Iran. As is the case with Lebanon Hezbollah, its activities cover the three tenets of Social help for the poor, political activism, rivalling with Mahmoud Abbas’ Fatah and winning the Gaza elections and terrorist or military activities.
Most experts believe that Saturday’s deluge of missiles launched from Gaza and the large infiltration of militiamen into Israel by land, sea and air could not have happened without the technical support of Lebanon’s Hezbollah and, ultimately, Iran.
It is difficult to understand the suicidal tactics of HAMAS in this weekend’s military aggression inside Israel as a stand alone coup.
Hamas knows full well that Israel’s retaliation will be devastating for both its movement and the Gaza population and it is therefore likely that the October 7th operation is inscribed within a much larger regional strategy designed to demonstrate that Israel is not as strong as perceived, that the regional plans to exclude a Palestinian State from a global Peace process is doomed, and that ultimately violence and hostage-taking will force Israel to negotiate, release Palestinian prisoners in exchange for the Israeli hostages and re-open negotiations for a two-state solution.
The scope, range and magnitude of Saturday’s attack on Israel feels like an “all-or-nothing” strategy to provoke a shift in the rapport de force, positioning Hamas as the only defender of the Palestinian rights, discrediting Fatah and the Palestinian Authority and forcing the Arab world to take a stand with regards to the rights of the Palestinians to a Nation.
HAMAS may be aiming at weakening Israel’s armed forces and the Israeli population’s morale by dragging its military into a bloody terrestrial intervention in Gaza where they feel they can cause maximum damage in a highly densely civil population where air-born intervention would be causing outsized collateral damages in terms of civil casualties, causing international uproar.
Lebanon’s Hezbollah was created by Iran in 1983, in the middle of the Iran-Iraqi war with the objective of fighting Israel, kicking it out of Lebanons’ south and constitute a constant threat at its Norther Border as an outpost of Iran’s anti-Israeli strategy. Hezbollah is a terrorist organisation that masterminded the US embassy and French army bombings in Lebanon in 1983 as well as numerous hostage taking of foreigners and diplomats.
After Israel’s withdrawal in 2000, Hezbollah took control of the South of Lebanon, and funded to the tune of USD 100 to 200 Million a month for the past decades, it gained control of the Shia populations of Lebanon, today estimated to exceed 40 % of the Lebanese population, through social spendings, replacing the Lebanese state, restoring the pride of the Shia community in Lebanon and positioning itself as the only resistance to Israel.
Over the years, Hezbollah has taken control of Lebanon through its influence over the corrupt Lebanese politician class, acting on their in internal divisions to weaken the Christian and Sunni communities. It has been identified as the mastermind behind the killing of Prime Minister Rafic Hariri, undermining the influence of the oil-rich Sunni Monarchies of the Gulf in Lebanon, and raising the influence of Iran in all matters on Lebanon’s internal politics.
Hezbollah used the weakness of the Lebanese political system and confessional division to bring its economy and banking system to its knees, making Lebanon the biggest human, social, economic and financial collapse of the world in the past 150 years.
According to military sources, Hezbollah has planted in excess of 100’000 missiles on the Lebanese soil pointed at Israel and it is regularly commented that the massive explosion of the Port of Beirut in 2020 masked the destruction of a Hezbollah facility to transform basic missiles into guided missiles with the help of Iran’s technology.
23 years ago, Hezbollah kidnapped two Israeli soldiers in the disputed Chebaa farms in South Lebanon, leading to a devastating war with Israel in the summer of 2006 that costed Lebanon thousands of lives and in excess of USD 4 billion of Lebanese infrastructure .
Hezbollah has been active in the Syrian civil war as well as in the Russian invasion of Ukraine.
As transpires from the news of the past few hours, it seems that Hezbollah has started launching missiles against Israeli military positions on its Northern border, in support of Hamas’s attack on Israel on Saturday.
Israeli intelligence reports that Hezbollah and Iran have actively participated in the planning and decision-making of the attack and that the final green light was given at a meeting in Beirut suburbs the previous Monday.
The key question therefore is whether Hezbollah is expected to play a military part in a wider strategy of weakening the Israeli Defense Forces by opening two military fronts at the same time, one in Gaza that will mobilise Tsahal land forces, and one at the border of Lebanon as seems to be the case with the movements of Israeli troops at the border and the warnings sent by Israel to the inhabitants of Southern Lebanon.
If Saturday’s attack is part of a wider military plan masterminded by Iran, then we are entering a regional war that what could have considerable implications for the world political scene at large.
Hezbollah is suspected of having disseminated between 100’000 and 150’000 short and medium range missiles across the entire Lebanese territory pointed at Israel and destined to reach every parts of Israel territory.
In 2019, the Israeli Defense Forces shared with their military counterparts of the West their strategic plan to destroy Hezbollah’s military capabilities in Lebanon through the use of massive aerial bombing, targeting both identified sources of fire and Lebanese infrastructure across the country.
The devastating explosion of the port of Beirut on August 4th 2020, which remains unexplained and un-investigated untill now due to the refusal of Hezbollah to give access to the facilities, happened in a warehouse that has been identified by the Israeli as a workshop transforming conventional missiles in guided missiles by Benjamin Nethayahu himself at the General Assembly of the United Nation in September 2019.
Only three months after the 1979 Iranian Revolution, its religious leader Khomeini who has been protected and sheltered by the French at Neauphle le Chateau over the previous decade, inscribed the destruction of Israel and the freeing of Palestine as one of the strategic objectives of the Iranian Revolution.
Since then, and through all the circumvolutions and military events that marked the decades of the rule of the Iranian Islamic Revolution, Iran positioned itself as the Champion of the Palestinian cause, gradually replacing the traditional Arab Nations as the supporter of Palestine.
Using its oil riches, Iran created HEZBOLLAH in Lebanon in1983, throwing billions of US dollars every year for three decades to fund Hezbollah’s social programs, enabling it to take a considerable hold over the Shia populations of Lebanon and training and arming its militias into one of the most redoubtable military force opposing Israel in the region.Hezbollah’s mastering of drones, missiles and guerrilla tactics has been further perfected during the war in Syria as a support to Bashar EL Assad regular army in its fight against the Syrian revolution, with the technical assistance of the Russian military.
Today, Hezbollah controls Lebanon militarily, politically and economically, having participated in the killing of Saudi backed Rafic El Hariri and driven large portions of its population’s middle class – mainly Sunni muslim and Christians – to exile, changing forever the ethnic structure of Lebanon that they now consider to be a country belonging to the Shia crescent in the region.
Over decades, Iran has patiently invested in the destabilisation and controlling of a foreign country, Lebanon, to gain a direct military leverage at the Northern border of Isreal in its quest to destroy Israel and restore a Palestinian Nation.
The same strategy was used by Iran in Yemen by supporting the Houthi rebels tand ultimately toppling the Saudi backed Yemeni regime, plunging the country in a bloody civil war and outright famine, with a view to gain influence on the Shia populations of the Arabic Peninsula and gain military leverage over its traditional religious foes, the Sunni kingdoms of the region.
Finally, Iran used Hezbollah’s proximity to the Palestinian territories to fund and arm HAMAS leading it to gain political control of the Gaza Strip.
It is paramount to take the measure of the decades-long strategy of the Islamic Republic of Iran to establish its military capabilities against Israel in the levant and the Arab world with the building up of Hezbollah, Hamas and its growing influence in Iraq and Syria during after the ill-conceived demise of Saddam Hussein’s dictatorship by G. W. Bush on one hand and during the Syrian revolution.
It is important to realise that Iran’s strategy of confrontation of Israel is a long established plan that has been executed over decades to reach a stage of maximum probabilities of success. And that plan has resulted in the situation we have today, where Hezbollah on the North and Hamas in Gaza have replaced the traditional Arab armies that Israel defeated in the 1960s, 70s and 1980s.
Those constant military threats at Israel’s borders are directly controlled, equipped and financed by Iran.
Furthermore, Iran has consistently worked to master nuclear weaponry over the past decades, leading to to be put under heavy financial sanctions and economic restrictions. In recent months, reports from the International Atomic Agency supposed to monitor and report on the abiding of Iran to its pledge not to develop nuclear weapons capabilities have highlighted the non-compliance of Iran to that pledge.
Benjamin Netanyahu himself, has repeatedly declared publicly that Israel would NOT allow Iran to gain nuclear capabilities and that Israel was ready to act militarily unilaterally to destroy Iran’s Nuclear facilities.
On 10 April 2021, Iran unveiled feeding gas to several all-Iranian centrifuges, including 164 IR6 machines, 30 IR5 centrifuges, 30 IR6s centrifuges, and mechanical tests on the advanced IR9 machine on the National Nuclear Technology Day occasion. On 11 April 2021, early on Sunday, the day after the Iran unveiling, a blackout that seemed to have been caused by a deliberately planned blast hit the Natanz nuclear facility which caused damage to the electrical distribution grid. The Natanz incident happened almost a week after Iran and Biden tried to revive the Joint Comprehensive Plan of Action, which President Trump had unilaterally withdrawn.
There were different reports of the attack including a cyber-attack and an explosion. Iran, citing security issues, refused to reveal additional information and Israel publicly rejected to approve or deny any responsibility for the incident. However the US and Israel intelligence officials claimed that Israel was behind the cyber-attack on this incident.
For Israel, Iran gaining control of Nuclear weapons that can be delivered through ballistic missiles is an existential threat that cannot be negotiated, tolerated or accepted. Unconfirmed intelligence reports were already warning 6 months ago that Israel was planning to attack Iran’s Nuclear facilities before the year-end.
When looking at the Middle East with a geo-political bird’s eye in September 2023, Iran is probably THE ONE SINGLE AND MOST destabilising factor of the Middle East and the Arab world through its armed satellites in Lebanon, Gaza and Yemen and its interference in Iraq and Syria.
Domestically, the 40 years rule of the Islamic Revolution is seen as an economic failure and a ruthless authoritarian dictatorship that is facing widespread discontent and opposition.
Has Iran reached a stage where it needs a glaring international victory against Israel 50 years after the failure of the Arab Nations to destroy it during the Kippur war, another coordinated surprise attack on Israel by its Arab Nations ?
Does it need a new war against Israel to further establish the Shia leadership of the Muslims at a time where the Sunni Arab Nations are engaging into Peace with Israel at the expense of a Palestinian Nation ?
Has Iran reached Nuclear weapons capabilities ?
A deciphering of the current situation is the Middle East would not be complete without a mention of Russia.
Russia has always been active in the Israeli-Palestinian conflict and the Arab world. Its unwavering support of Syria’s Bashar El Assad has enabled him to remain in power through the devastation of his country and to prevail over the Sunni- backed Syrian revolution.
Without the help of Russia’s air force capabilities, the Syrian army would have lost the war on the ground and questions have been raised in the role and influence of Iran and Russia in the sudden appearance of ISIS in 2014 and 2015. It is Russia’s Foreign Minister LAVROV who protected Bashar El Assad and convinced US President Barack Obama not to bomb Syria when Assad used chemical weapons on his own people in September 2013, breaching the Red Line that Obama had set. A few months later, Assad and Maliki, his Shia counterpart in Iraq, both affiliated to Iran’s regime unilaterally freed the sunni radical islamists they had been fighting for years from their own prisons, providing the Human Resources for ISIS appearance and expansion in Northern Syria and Mossul.
The close links between Iran, Hezbollah and Russia are well established and confirmed by the presence of Hezbollah fighters in Ukraine and the use of Iranian made drones in the war by the Russian Army.
Today, Russia is engaged in the war in Ukraine which has become a proxy war between the US and Russia.
A war that is totally dependant on US and Western financial and technical help.
Timing of the October 7th attack
Besides the historical significance of the anniversary of the defeat of the Sunni Arab Nations in 1973, and of the kidnapping of three Israeli Soldiers in South Lebanon in 2006, the timing of Hamas’ deadly attack on Israel on Saturday could not be more appropriate :
. ISRAEL has been mired in political weakness for the best part of the last two years with Netanyahu severely contested for his attempts to lesser the power and independence of the Israeli Judiciary. The Israeli population’s morale was already low before the attack.
. Significant progresses had apparently been made on bringing the Kingdom of Saudi Arabia to normalise its relationship with Israel, according to the Western press, even if the timing of such a step was still very elusive.
. AMERICA is engaged in a massive proxy war against Russia in Ukraine, that is exacting significant financial resources and military focus for the US. Opening a second military front in the Middle East would weaken the support of the US and Europe to the war in Ukraine, easing the task of the Russian army.
. AMERICA is in a dysfunctional political situation with a divided Congress and a divided Republican Party on the eve of an all-important election year in 2024. It is going through a budgetary crisis that has already taken its toll on its ability to finance the war in Ukraine, one of the major sticking points of the legislative political process.
Freeing new military and financial resources for a new regional conflict in the Middle East in the midst of a heated and polarised election year and engaging new American troops on foreign soil would run against Joe BIDEN’s doctrine and prove to be an extremely challenging task.
. The Western economies are going through a massive fight against inflation, monetary tightening and potential economic deceleration that will add further pressure on tax receipts and budgetary equilibriums at a time of excessive leverage.
. A generalised conflict in the Middle East would have the effect of sending oil prices surging, sending yet another inflationary shocks to the world economies, particularly for Europe and Japan.
What are the possible scenarios ahead
It is always difficult to predict the outcome of war events, particularly on this scale and concerning such an existential conflict that has ruled the world and the region for so many decades, however, it is possible to identify possibilities of alternative scenarios knowing that Bayesian probabilities can evolve extreme quickly.
As a preamble, global investors would be incredibly light in dismissing the importance of what is taking place in Israel today and its global implications.
In exactly the same way investors dismissed the possibility of a Russian invasion of Ukraine in February 2022 while all the signs of Putin’s intention were clearly visible, the possibility that the HAMAS attack of October 7th leads to a global regional conflict and maybe a highly costly but historical turning point in the Middle East and the Palestinian – Israeli conflict cannot be excluded.
The potential military and regional developments ahead hinge on two fundamental questions the answers to which are difficult to assess at this stage but will ultimately reveal themselves in te coming days and weeks :
- As we highlighted above, and as most experts agree on, the October 7th attack by HAMAS is totally suicidal IF it is not inscribed in a large plan by Iran to destabilise Israel. Hamas knows full-well that the Israeli reaction will be extremely forceful, regardless of the presence of Israeli hostages, and will likely lead to a massive land forces operation in Gaza, the eradication of Hamas itself and its loss of the control of the Gaza Strip politically, besides the enormous cost in terms of Palestinian lives.and infrastructure destruction.
The sheer size of the operation and means used to implement its it leaves no choice for Israel but to act forcefully and decisively to avoid a repeat of similar attempts in the future. Speculating that the taking of in excess of a 100 civilian hostages will prevent such an operation may be a miscalculation, considering the already 1000 Israeli lives lost over the week end.
If, by contrast, the Oct. 7th attack by HAMAS is part of wider plan involving Hezbollah in the North and the use of its offensive missiles against Israel, and even potentially the triggering of a missile war between Iran and Israel, then the context and potential outcome for HAMAS is radically different, and could explain their all-or-nothing strategic move.
Although the USA has, for now, avoided to confirm Iran’s involvement in the attacks, the declaration of Joe Biden pledging unlimited support to Israel and threatening all other actors against taking advantage of the situation, together with the immediate sending of a US aircraft carrier and guided missile ships to the region confirm that the possibility cannot be excluded.
- The second determining factor will be the political ability, popular willingness and military capability of Israel to engage in a wide range regional war against Iran and its satellites. This is a crucial question as it obviously entails considerable losses of lives – already mentioned by Banyamin Netanyahu in his address to the Nation – and potentially considerable economic and infrastructure destructions.
Determining potential outcomes in such a situation is like playing chess and analysing the possible moves of the various parties, knowing that actions may bring reactions and lead to escalations.
A. Israel’s reaction against Hamas in the Gaza strip
One of the probable reaction of Israel to the October 7th attack will be a land invasion of Gaza, once the Israeli army will have finally dealt with regaining control of the situation on Israeli soil – pockets of fighting still happening at the time of writing – and evacuating and securing the area bordering the Gaza Strip.
Some analysts believe that Israel will engage in negotiations to exchange the Israeli hostages against Palestinian prisoners and that may happen indeed,
however, considering the magnitude and damage caused by the October 7th attack, it is highly unlikely that Israel will accept the survival of HAMAS in the Gaza Strip and it is faced with the extremely difficult choice of considering to re-invade the strip and clean it up militarily, at a potentially extremely high cost for the Israeli military waging an urban guerrilla war in an area populated with 2 million people, a large part of which is willing to engage in the fighting, and potentially accepting as well the loss of the lives of the hostages.
A military invasion of the Gaza Strip will require extremely careful planning and preparations that will probably take weeks and probably imply the shutting down of electricity, telecommunication, water and medical supply to the Palestinian population of the strip. It may also entail waves of aerial bombings with considerable civilian casualties to prepare the ground for a land invasion by its army, causing a significant uproar and loss of support by the international community.
These are extremely hard political decisions for Netanyahu’s administration to make
and it may be precisely the objective of Hamas to bring the Israeli army into a deadly trap in the densely populated Gaza Strip.
Time will tell, but Israel is at war and feels threatened, so the first and most obvious consequence of the Oct 7 attack will be the objective of Israel to eradicate Hamas by whichever means and over whatever time horizon it may take.
B. Israel’s reaction against the threat of Iran’s Nuclear program
The destruction of Iran’s nuclear capabilities has always been a top priority of the Israeli agenda and of Natanyahu’s agenda as, as detailed above, a situation where Iran would have the capability of delivering nuclear weapons through ballistic missiles is seen as an existential threat to the survival of Israel.
We are of the view that it is only a question of days and weeks before Israel launches an attack on Iran’s nuclear facilities, and even potentially, on facilities of the Iranian Pasdaran if Israel’s intelligence confirms Iran’s implication in the planning and decision-making process of the Oct 7th Attack.
Such an attack would constitute a declaration of war and trigger a regional conflict with considerable repercussions in the Hormuz straits through which about a third of the oil consumed everyday transits, and through a potential war of ballistic missiles and aerial fights that would destabilise the whole region.
Moreover, it would probably lead to a US military involvement as well.
C. Lebanon’s Hezbollah opening a new front at the Northern Border
At the time of writing, there has already been reports of attempts of infiltration into Israel through the border with Lebanon and of aerial bombings in the South of Lebanon. Israel’s army has already moved troops and equipment to the border and warned the Lebanese residents of the South to evacuate the area.
However, for now, Hezbollah denies any involvement and the incursions into the Israeli territory may have been done by Palestinian fighters from the Palestinian camps in South Lebanon. Lebanon is home to 270’000 Palestinian refugees and the Palestinian camps in Southern and Northern Lebanon are flush with armaments.
The question is whether Hezbollah will open a second front at the Northern border of Israel and activate its vast stock of missiles to hit the Israeli territory and populations. The second question is whether its involvement will be the part of a preconceived strategic plan or a reaction to any invasion of Gaza or attack on Iran itself.
Israel has developed plans to counter the threat of Hezbollah and Hezbollah’s missiles through massive aerial bombings long ago and can implement them pre-emptively extremely quickly. War simulations give an estimate of several thousands of Israeli casualties from missiles escaping Iron Dome and direct attacks, and of at least 100’000 Lebanese casualties, let alone the devastation of Lebanons’ infrastructure.
As is the case with a potential invasion of Gaza by Israel’s land forces when it comes to the eradication of Hamas, any military action against Hezbollah in Lebanon at this stage will have the objective of eradicating Hezbollah from Lebanon – and probably Syria as well – and resetting the political and military organisation of the country.
This will imply the implication of a major military force on the ground that will not be Israeli, but could potentially be a multi-national or American force.
It remains to be seen what would be the reaction of Russia to such outcomes considering its strategic presence in Syria.
As can be concluded from the above analytical process, we are facing a highly dangerous and extremely binary situation in the Middle East and the Israeli-Palestinian conflict.
1. Either the October 7th attack is a stand-alone, but suicidal move by Hamas, or it is part of a much wider plan orchestrated by Iran to weaken Israel, its military and its economy, and restore the debate and potential for a Palestinian Nation.
The coming weeks will reveal the cards depending on the moves of the various parties to the conflict.
Has Iran reached the stage of an all-round attack on Israel on the 50th anniversary of the Kippur war ?
Is it ready to engage in a military confrontation with Israel ?
2. The attack has given Israel and Netanyahu a domestic and international legitimacy to act forcefully, and potentially deal in a definitive way with the three existential threats it perceives with the presence of Hamas in Gaza, of Hezbollah in Lebanon and the nuclear capabilities of Iran.
The human cost would be considerable on all sides but Israel’s strategy of containment rather than action of the past decade has only led to a re-enforcing of the threats, in Gaza with the growing hold of Hamas on the population, in Lebanon with Hezbollah taking control of the country and in Iran with the constant development of its technologies.
Has Israel arrived to the point of acting decisively at whatever cost to secure its long term future ?
The fact of the matter is that in the past 24 hours, it has declared itself in a State of War and has mobilised 300’000 reservists, the largest number in its own history. It is clearly preparing itself for an all-round war that could be determine the conditions of its own survival.
3. Has Israel, the Arab world, America and the world at large reached the stage where the destabilising actions of the Iranian Islamic Revolution are no longer bearable ?
Only time will tell and the answer to this question may only unfold as and when military tensions evolve, but one thing is for sure, America will put all its weight behind the survival of Israel if it feels its existence is threatened.
This means the unfolding of yet another large scale regional war with considerable draining of Americas’ military and financial resources at a time where it is already engaged alongside Ukraine.
. We doubt that Hamas’ attack on Israeli soil on October 7th is a simple “coup d’eclat” destined to prove its capabilities and obtain the liberation of thousands of Palestinian prisoners in exchange for the Israeli hostages.
We may be wrong, but if this is the case – and it could be actually the best case scenario – it is a suicidal move that will ultimately see Hamas destroyed over time.
. Israel is at a historical crossroad with wide implications for its long term future and the future of the stability of the region.
This deadly attack may be the starting point of a radical change in the entire equation of the region and Iran’s influence over the Arab populations of the Levant.
Drastic military action against Hamas in Gaza, Hezbollah in Lebanon and Syria and Iran itself could end up securing its border on the North and the Palestinian Territories in the South, while furthering the Peace process initiated with the Arab nations of the Gulf and Egypt.
The human cost in Israel, Palestine and Lebanon will be huge and success far from guaranteed. On the other hand, inaction will leave Israel with constant and rising threats at its borders as demonstrated by the Oct 7th attack.
. Iran’s role, long term objectives and decade long strategies are at the heart of the problem for Israel, for the Sunni Arab World and for the world at large.
Is it simply sacrificing Hamas to weaken Israel and torpedo the Arab-Israeli process ?
Has it started the execution of its long stated objective of destroying the State of Israel and establishing an Islamic Palestinian Nation ? Is it reacting to a deteriorating domestic political and economic situation ?
. When it comes to the financial markets, wars come with destabilisation and Iran commands a major leverage on the world economies through its control over the Straits of Hormuz and the price of oil. Can the world economies withstand another surge in energy prices ?
We would like to conclude this lengthy piece by stating that no lasting peace can be built on injustice, hardship, despair and hopelessness.
The big losers of all the dynamics at play in the Middle East are the Palestinians as a Nation and as a People.
Innocent Palestinian civilians are dying everyday alongside the innocent Israelis targeted by terrorism and Gaza is a humongous refugee camp with millions of people left without hope or prospects.
The same applies to Palestinian refugees that have now lived for decades and four generations in refugee camps in Syria and Lebanon without rights and without hopes for a better life. Whatever the outcome of the events unfolding under our eyes in the Middle East, peace, safety security and economic development for ALL must be the ultimate priority.
Many populations in history and even recent history have been deprived of a nation of their own, with the latest example being the Armenian exodus from Kharabakh, but there will be no lasting peace in the Middle East if the Palestinians inside of Israel and outside of Israel are not given the rights and opportunities to become full citizens of the nations in which they are living.
MAXIN ADVISORS Weekly Market Review 8 Oct 2023
World Food Prices at Over 2-Year Low
The FAO Food Price Index edged lower to 121.5 in September 2023, the lowest since March 2021, from an upwardly revised 121.6 in August. Prices for vegetable oils were down 3.9%, a second decline, due to lower prices across palm, sunflower, soy and rapeseed oils. Palm oil prices continued to decrease, amid seasonally elevated production in major producing countries in Southeast Asia. Also, dairy prices decreased 2.3%, a ninth consecutive fall. Meat cost dropped 1%, led by a fall in pig meat amid weak import demand from China, and ample global export availabilities. On the other hand, cost increased for cereals (1%), prompted by a 5.3% rise in coarse grain prices, namely maize (7%) while wheat fell 1.6%. Also, sugar prices soared 9.8% to reach a November 2010-high amid increasing concerns over a tighter global supply outlook in the upcoming 2023/24 season and forecasts pointing to production declines in Thailand and India.
US 10-Year Treasury Yield Rises to 16-Year High
The yield on the US 10-year Treasury surged to above the 4.8% mark in October, reaching a fresh 16-year high, after new evidence of a tight labor market strengthened bets that the Federal Reserve will prolong its hawkish stance. Non-farm payrolls rose by 336 thousand in September, the most in eight months and well above expectations of a 170 thousand gain. The results compounded evidence that the US economy remains resilient amid a high-inflationary environment and the Fed’s aggressive tightening cycle, strengthening the consensus that neutral interest rates have shifted considerably higher since the 2008 recession, and consolidating higher bond yields in the long term. Bets that the Fed will refrain from considerably cutting rates in normal conditions triggered a selloff for long-dated government bonds worldwide, with the yield on the 10-year Treasury note soaring nearly 30bps this week, while that on the 30-year bond crossed 5% for the first time since August 2007.
US Mortgage Rates Hit Fresh 2000-High
The average rate on a 30-year fixed mortgage continued to climb, reaching 7.49% as of October 5th, 2023, a level last seen in 2000. This marks an increase from the previous week’s average of 7.31%, driven by the ongoing rise in US Treasury yields. “Mortgage rates maintained their upward trajectory as the 10-year Treasury yield, a key benchmark, climbed,” said Sam Khater, Freddie Mac’s Chief Economist. “Several factors, including shifts in inflation, the job market and uncertainty around the Federal Reserve’s next move, are contributing to the highest mortgage rates in a generation. Unsurprisingly, this is pulling back homebuyer demand.”
US Job Growth at 8-Month High
US nonfarm payrolls increased by 336K in September 2023, well above an upwardly revised 227K in August, and beating market forecasts of 170K. It is the strongest job gain in eight months, and well above the 70K-100K needed per month to keep up with the growth in the working-age population, signalling that the labor market is gradually easing but remains resilient despite the Fed’s tightening campaign. Job gains occurred in leisure and hospitality (96K), above the average monthly gain of 61K over the prior 12 months; government (73K), also above the average monthly gain of 47K over the prior 12 months; health care (41K); professional, scientific, and technical services (29K); and social assistance (25K). Employment showed little change in other major industries, including mining, quarrying, and oil and gas extraction; construction; manufacturing; wholesale trade; retail trade; financial activities; and other services.
US Unemployment Rate Holds at 3.8%
The unemployment rate in the US was at 3.8% in September of 2023, remaining unchanged from the February 2022 high from the previous month and slightly above market expectations of 3.7%. Still, the result consolidated evidence that the labor market remains tight on historical standards, adding leeway for the Federal Reserve to leave borrowing costs at restrictive levels for a prolonged period. The number of unemployed individuals was essentially unchanged at 6.36 million people. The so-called U-6 unemployment rate, which also includes people who want to work, but have given up searching and those working part-time because they cannot find full-time employment, edged lower to 7% after touching a 15-month high of 7.1% in August. In the meantime, the labor force participation rate was also unchanged at 62.8%, the highest since February 2020.
US Wages Growth Slows to 0.2%
Average hourly earnings for all employees on US private nonfarm payrolls rose by 7 cents, or 0.2%, to $33.88 in September 2023, below market forecasts of a 0.3% increase. In September, average hourly earnings of private-sector production and nonsupervisory employees rose by 6 cents, or 0.2%, to $29.06. Over the past 12 months, average hourly earnings have increased by 4.2%, the least since June 2021 and below market estimates of a 4.3% rise.
Canadian Economic Activity Slows in September: Ivey PMI
The Ivey Purchasing Managers Index in Canada eased to 53.1 in September 2023, from August’s 53.5 and compared with market forecasts of 50.8. The latest reading indicated a second consecutive month of modest expansion in economic activity, although at a softer rate, mainly due to a reduction in inventories (48.1 vs 51.3 in August). Meanwhile, the pace of job creation accelerated to a six-month high (58.5 vs 54.8) and supplier delivery times shortened (52.5 vs 52.7). In the meantime, prices rose faster (67.3 vs 66.7).
Canadian Economy Adds the Most Jobs in 8 Months
The Canadian economy created 63.8K jobs in September of 2023, the highest in eight months and well above market expectations of a 20K increase. Among industries, employment rose substantially in educational services (+66,000), transportation & warehousing (+19,000). At the same time, it decreased in finance, insurance, real estate, rental & leasing (-20,000), construction (-18,000) and information, culture & recreation (-12,000). The number of workers went up in both part-time work (+48,000) and in full-time (+15,800). Employment increased in six provinces in September, led by Quebec (+39,000) and British Columbia (+26,000), while it declined in Alberta (-38,000) and New Brunswick (-2,700). Meanwhile, the unemployment rate remained unchanged for the third consecutive period at 5.5% in September of 2023, the highest since January 2022.
UK House Prices Fall the Most Since 2009
The Halifax House Price Index dropped by 4.7% yoy in September 2023, following a marginally revised 4.5% fall in August. It was the biggest decrease in house prices since August 2009, amid persistently high borrowing costs and growing evidence that homeowners became more realistic about their target selling price. A typical UK home now costs £278,601, around the level seen in early 2022. “Activity levels continued to look subdued compared to recent years, with industry data showing lower levels of new instructions to sell homes and agreed sales,” said Kim Kinnaird, director of Halifax Mortgages, adding that downward pressure on house prices likely extend into next year due to many factors. Across the nation, prices in South East of England were under strong downward pressure (-5.7%) while those in Northern Ireland currently were the most resilient (-0.2%). On a monthly basis, house prices fell by 0.4% in September, compared to a marginally revised 1.8% decline in August.
UK Construction Output Falls the Most Since 2020
The S&P Global/CIPS UK Construction PMI dropped to 45 in September 2023 from 50.8 in the previous month and below market expectations of 49.9. The latest reading marked the first contraction in construction sector output since June, with the fastest rate of decline since May 2020. Total new business activity decreased for the third time in the last four months in September, reaching its most significant drop in over three years. Residential work was notably the weakest sector in terms of output, followed by civil engineering activity. Aside from the pandemic, the most recent fall in housing activity was the steepest since April 2009, primarily attributed to reductions in house building projects amid rising borrowing costs and weak demand conditions. Finally, construction firms are predicting a rise in output over the year ahead, driven by long-term business expansion plans and hopes of a turnaround in customer demand.
Germany Factory Orders Surprise on the Upside
Factory orders in Germany increased 3.9% mom in August 2023, rebounding from an 11.3% slump in July, and beating forecasts of a 1.8% increase. Excluding large-scale orders, new orders were also up 3.9%. Biggest upward contribution came from the manufacture of computer, electronic and optical products sector which soared 37.9%, namely orders of electronic components for both the domestic and the foreign market. Other increases were also seen for electrical equipment (8.7%), pharmaceuticals (4%), intermediate goods (9.3%), consumer goods (8.8%) and capital goods (0.1%). On the other hand, orders for the automotive industry fell 0.7%. Meanwhile, foreign orders were up 3.9% and domestic ones rose by 4%. The less volatile three-month on three-month comparison showed that new orders were 4.9% higher in the period from June to August than in the previous three months.
France Current Account Deficit Narrows
France’s current account deficit narrowed to EUR 0.8 billion in August 2023 from EUR 1.8 billion in the previous month. The services surplus widened to EUR 3.3 billion from EUR 2.0 billion, while the surplus for primary income edged down to EUR 5.8 billion from EUR 5.9 billion. At the same time, the goods deficit increased to EUR 6.4 billion from EUR 6.2 billion, while the deficit for secondary income was unchanged at EUR 3.5 billion
French Trade Deficit Widens
France’s trade deficit widened slightly to €8.2 billion in August of 2023, following an upwardly revised €8.1 billion in the previous month, and below market forecasts of €8.9 billion. Imports fell by 2.8 percent month-over-month to €59 billion and exports decreased by 3.4 percent to four-month low of €50.8 billion. The energy gap shrank to €5.5 billion from €7.3 billion in July. Excluding energy, the trade deficit rose to €4.7 billion from € 2.9 billion. In the manufacturing industry, the trade balance for capital goods deteriorates again (€-0.2 billion vs € -0.4 billion in July), while the balance of intermediate goods shows a reduction (€0.1 billion vs €0.4 billion) and consumer goods remained stable over the last two months (€0.1 billion).
Spain Consumer Confidence Tumbles in September
The consumer confidence indicator in Spain sank to 77.2 in September of 2023 from the near-two-year high of 94.4 in July, reflecting a fresh downturn in sentiment after skipping August’s data. The result suggested that Spanish consumers are feeling the effect of higher interest rates from the European Central Bank to a greater extent, aligning with the deterioration from other indicators in the currency bloc. Consumer sentiment was considerably lower for both the current situation (68.4 vs 87.1 in July) and future expectations (86 vs 101.7).
Swiss Jobless Rate Steady at 2%
The Swiss unemployment rate stood at a non-seasonally adjusted 2% in September 2023, the same as in the previous month. The number of unemployed persons increased by 945 from a month earlier to 90,826. Meanwhile, the youth unemployment rate, measuring job-seekers between 15-24 years old, remained unchanged at 2.2%, with the number of young unemployed decreasing by 33 to 9,779.
Japan Leading Economic Index Highest in 9 Months
The index of leading economic indicators in Japan, which is used to gauge the economic outlook for a few months ahead on data such as job offers and consumer sentiment, increased to 109.5 in August 2023 from a final 108.2 in the previous month, and above market forecast of 109, a flash estimate showed. It was the highest reading since last November, amid expectations built that a recovery momentum in the Japanese economy would continue, with the service sector growing the most in three months in August.
Japan Personal Spending Drops Less than Expected
Household spending in Japan declined in real terms by 2.5% yoy in August 2023, compared with market consensus of a 4.3% fall and after a 5.0% drop in the prior month. While marking the softest fall in personal expenditure since March, the latest result pointed to the seventh time of decrease so far this year. Spending remained weak for food (-2.5% vs -2.8% in July), furniture & household utensils (-5.1% vs 0.4%), clothing & footwear (-5.9% vs -6.9%), fuel, light & water charges (-0.5% vs 3.2%), medical care (-11.2% vs -7.5%), culture & recreation (3.0% vs -2.8%), and education (-13.6% vs -9.8%). By contrast, expenditures recovered for both housing (4.5% vs -18.6%) and transport & communication (0.1% vs -5.1%).
The Week Ahead
In the United States, the focus will be on the inflation report for September. The CPI is anticipated to have risen by 0.3% last month, a decrease from the 0.6% increase seen in August, while the core index is expected to have increased by 0.3%. Additionally, the headline annual inflation rate is expected to slow slightly to 3.6%. Furthermore, investors will follow the release of FOMC minutes, speeches by several Federal Reserve officials, Michigan Consumer Sentiment, producer inflation data, and the government’s monthly budget statement. Finally, next week marks the beginning of the Q3 earnings season with reports from Citigroup, JPMorgan Chase, Wells Fargo, BlackRock, UnitedHealth Group, PepsiCo, and Delta Air Lines. In other parts of the Americas, key data to watch for includes inflation reports from both Mexico and Brazil, as well as Brazil’s business confidence.
In Europe, the ECB is set to release its monetary policy meeting accounts on Thursday. Also, updated CPI reports are anticipated to confirm a significant easing of inflation in Germany to 4.5%, while France is expected to maintain its high level at 4.9%, both well above the ECB’s 2% target. Industrial production in the Euro Area is expected to see a slight rebound, while Italy is set to experience stagnant output growth, and in Germany, output is likely to have declined for the fourth consecutive month. Additionally, data will include Turkey’s unemployment rate and industrial output, as well as Russia’s inflation rate and balance of trade.In the United Kingdom, monthly GDP figures from the ONS are expected to show economic expansion in August. However, industrial and manufacturing output are anticipated to decline for the second consecutive month. Investors will also be monitoring the foreign trade balance, construction output, and the BRC retail sales monitor.
In Asia, financial and commodity markets in China will reopen and cetral stage will be take by foreign trade data, M2 Money supply, New Yuan loans and September’s CPI print. In Japan, investors await October’s Reuters Tankan index and August’s current account. In India, a busy week of economic releases will be headlined by September’s inflation rate, set to ease back to below the RBI’s upper threshold after the central bank warned it may start to sell G-Secs. Other Indian releases include industrial production and the trade balance. Elsewhere, Singapore will unveil its 3rd quarter GDP and South Korea will update its unemployment rate.
In Australia, investors await key forward-looking indicators in October’s Westpac Consumer Confidence and September’s NAB Business Confidence.
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