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1.  Stratfor’s Latest Analysis On The War.

2.  Media Turns Negative – Americans More Positive.

3.  The Transformation Of Geraldo Rivera.

4.  The Markets – Fasten Your Seatbelt.

Stratfor’s Latest Assessment of The War

In a conversation early this morning, Dr. George Friedman, president and founder of, gave me his latest analysis of the war in Iraq., as most of you will recall, is a highly respected global intelligence firm headquartered here in Austin, with contacts all around the world.  I have known Dr. Friedman for several years.  What follows is a brief summary of what George told me this morning.

First off, he is a little puzzled at exactly how the US has decided to prosecute the war in these first few days.   Prior to the commencement of the war, the Defense Department had made it known that the war plan included an initial air campaign, commonly referred to as “Shock & Awe,” which would be conducted prior to the insertion of ground troops.  But as we all have learned, President Bush and his team decided at the last minute to make a surgical strike on a compound outside Baghdad where Saddam and his inner circle were believed to be meeting.

That strike appears to have been very successful, and it is widely believed that Saddam was injured, perhaps seriously, and that one or both of his sons were badly injured or killed, along with one of Saddam’s most brutal generals known as “Chemical Ali.”

Dr. Friedman believes that this initial success in striking Saddam and his inner circle as the first action of the war bolstered the confidence of the Bush team that Iraqi military forces would surrender in large numbers, or at least retreat hastily once our ground forces appeared.  As a result of this confidence, Dr. Friedman believes the decision was made to send ground troops in at the same time the air campaign began.  Thus far, the air campaign has not been the Shock & Awe or “sledge hammer” as was expected.

The Iraqi resistance to our forces has been stiffer than had been expected (at least as portrayed by the media).  Stratfor’s intelligence indicates that Saddam placed some of his top commanders in charge of the forces that have put up most of the resistance to our troops, while at the same time keeping the bulk of his Republican Guard troops dispersed in and around Baghdad.

In Need Of Rest, Repair & More Forces

As we’ve seen on television, parts of the 3rd Infantry Division are nearing Baghdad.  However, Dr. Friedman notes that the 3rd ID and its support groups are strung out over an apprx. 150-kilometer area.  After five very intense days of movement, Stratfor’s intelligence indicates that the 3rd Infantry needs to pause for rest, repair of equipment and for the remainder of the Division to catch up to the front lines. 

Dr. Friedman also believes that it would be unwise for the US to try to attack Baghdad with only the 3rd ID in place.  Estimates are that Saddam has at least four divisions in or near Baghdad.  Even with heavy air bombardment, Dr. Friedman believes it would be risky to attack Baghdad on the ground until more forces arrive.

The British division has been stalled in the south in the Basra area where they are meeting moderate resistance from Iraqi forces.  Dr. Friedman believes the 3rd ID will have to wait at least until the Brits can clean up the south and move their forces up with the 3rd ID, and/or maybe even until the 4th Infantry Division is in place.  The 4th ID was the group that was positioned to go in via Turkey; their equipment is due to arrive in Kuwait any day now.

At Least Several More Weeks Of War

President Bush, Secretary Rumsfeld, General Franks and others have emphasized all along that the war would likely last longer than has been widely speculated by the media.  They also continually emphasize that the war is going according to plan.  This may be true, but it does appear they may have under-estimated the Iraqi resistance.

Dr. Friedman reminded me this morning that the first Gulf War lasted six weeks, and that Kosovo lasted two months.   He expects that the current Iraq war will also last a couple of months, and that a sizable contingent of US forces will remain in Iraq for at least a year or longer.

Media Reacts Negatively To Latest Difficulties

When the news broke on Sunday that Iraqi forces had captured 7-8 US military servicemen (including one woman), complete with the gruesome videotape suggesting some had been executed, the tone of the media immediately began to change.  Many in the media began to question the war plan and our leadership, and the tone went from measured exuberance to obvious concern.

We should be concerned anytime US military men and women’s lives are at risk.  Still, a great deal has been accomplished in just a week.  1) We have the 3rd ID rapidly gathering apprx. 50 miles from Baghdad; 2) we have successfully protected our troops in Kuwait from rocket attacks; 3) we appear to have secured western Iraq where it was feared Saddam would launch missiles at Israel; 4) substantial additional forces will be in place near Baghdad over the next two weeks; and 5) we have prevented the Iraqis from torching their oilfields (reportedly only nine wells have been set ablaze).

The liberal, anti-Bush media was against this war before it started.  While they had no choice but to get onboard, given the early successes, they will be quick to turn negative if more bad things occur.  Fortunately, the American people are still solidly behind the Bush team and the war effort.  The latest polls show that 70-72% of the American people are in favor of the war (Washington Post, CNN, among others).  President Bush’s approval rating rose from 62% to 67% in the latest poll (MSNBC, among others).

By the way, if you want to monitor the LIBERAL BIAS in the media, there is an excellent website to visit.  It is called the Media Research Center CyberAlert; the web address to go to is .  This site is really cool!  For example, they monitor all the news anchors for the mainstream media (Rather, Brokaw, Jennings, etc.) and they point out all their liberal inferences and innuendo on a daily basis.  You can subscribe for free, and they will e-mail you the same daily media bias reports that I get.  Check it out.

What Happens Next In The War

While Dr. Friedman believes the 3 rd Infantry will wait for more forces before attacking Baghdad, he also believes that there will be considerable combat outside of Baghdad as additional forces are on their way.  He expects the 3rd ID to begin engaging Republican Guard forces outside Baghdad later this week, perhaps even tomorrow if weather permits.

These ground combat activities will be accompanied by an intensifying air campaign on Baghdad in order to soften-up Iraqi troops there prior to the main assault on Baghdad, according to Dr. Friedman.

The big question now is whether Saddam will use chemical weapons on our forces as they approach Baghdad.  Major news services including CNN, CBS and NBC ran stories as follows on Monday:

“It's believed once U.S. ground troops cross the line drawn roughly between Karbala and Al Kut, the Republican Guards are under orders to attack with chemical weapons,” NBC said, citing intelligence officials who based the information on intercepts of Iraqi communications.  This remains to be seen.

The Transformation Of Geraldo Rivera

I can’t help commenting on this.   I was intently watching TV coverage of the war last Saturday night when my family was out of town.  As I flipped around the networks, I came upon FOX News reporter Geraldo Rivera speaking from Afghanistan.   As most of you probably know Geraldo has, in his high-profile and checkered past, been a flaming liberal, very anti-gun and anti-military.  Since he moved to FOX - a generally neutral network – a couple of years ago, Geraldo has undergone quite the transformation!   Especially since the war in Afghanistan when he decided to pack a weapon on his person, so he said. 

Now he’s a flag-waving, military-supporting, conservative, or so it seems.  On Saturday night around 9:15 p.m. CST on FOX, I listened in shock as Geraldo admitted to our troops in Afghanistan that he regrets his Viet Nam protests.    

He praised the Bush administration and called our mission in Iraq one of the most “righteous missions of all time.”  WOW!

He even called for faith in God and PRAYER at end of the show, and the commander of the troops there actually said a prayer along with Geraldo and the soldiers.  I couldn’t believe what I was seeing!  I only hope it was sincere and not just “show-biz.”

The Markets & The War – Fasten Your Seatbelts! 

The stock market rally which began on March 12 was one of the most powerful moves in such a short time in the last 20 years.  The Dow jumped 13.3% in just seven trading days.  The S&P 500 rose 12%.  Speculators ran to cover short positions ahead of the war, and many investors who apparently share my view that the equity markets would rally if the war goes well were buyers. 

During this same brief period, crude oil prices dropped sharply, gold took a dive and the US dollar rallied strongly.  All of these moves were counter to the major trends of late.

But positive attitudes and confidence faded on Sunday when we learned that the Iraqis had captured and killed several of our soldiers.  The stock markets plunged yesterday on some of the heaviest trading so far this year, with the Dow Jones closing down 307 points or 3.6% for the day.  As this is written (mid-day today), the Dow is up over 100 points.

The markets are trading on pure emotion.  The sell-off yesterday was as much a gross over-reaction to war news as was the big run-up last week.  In addition to the stock market dive, crude oil prices rose sharply, the dollar lost ground and gold rose $3.50 an ounce yesterday.  Expect this kind of market volatility to continue – with stocks going higher on good days in the war and lower on bad days in the war.  

As noted above, Stratfor and other sources expect US forces to begin to hit Iraq’s Republican Guard units outside Baghdad in a series of battles aimed at breaking Iraq’s military capabilities.  This fighting could be serious and bloody.  If there are days when this fighting doesn’t go well, and we take more casualties, the stock markets will likely go down again.

I continue to believe that the stock market lows on March 12 will hold, and that the equity markets will continue to trend higher - IF the war goes well.   I believe there will be many more good days in the war than bad ones.  If this is true, the stock market could surprise on the upside, at least for several months. 

I also continue to believe that if the war goes well, consumer confidence will rebound significantly, and the economy will improve during the balance of this year.  Let’s hope my outlook proves to be correct.

Have a good week and keep praying for our troops and our leaders.

Kind regards,

Gary D. Halbert


It will take time to take Baghdad.

Tony Blair: A huge amount has been accomplished.

Iraqi people turn against Saddam’s troops in Basra.

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Forecasts & Trends E-Letter is published by Halbert Wealth Management, Inc. Gary D. Halbert is the president and CEO of Halbert Wealth Management, Inc. and is the editor of this publication. Information contained herein is taken from sources believed to be reliable but cannot be guaranteed as to its accuracy. Opinions and recommendations herein generally reflect the judgement of Gary D. Halbert (or another named author) and may change at any time without written notice. Market opinions contained herein are intended as general observations and are not intended as specific investment advice. Readers are urged to check with their investment counselors before making any investment decisions. This electronic newsletter does not constitute an offer of sale of any securities. Gary D. Halbert, Halbert Wealth Management, Inc., and its affiliated companies, its officers, directors and/or employees may or may not have investments in markets or programs mentioned herein. Past results are not necessarily indicative of future results. Reprinting for family or friends is allowed with proper credit. However, republishing (written or electronically) in its entirety or through the use of extensive quotes is prohibited without prior written consent.

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