FORECASTS & TRENDS E-LETTER
by Gary D. Halbert
June 25, 2019

IN THIS ISSUE:

1. Trump’s Iran Decision Could Secure His Victory in 2020

2. How the US & Iran Got to This Very Dangerous Place

3. Why Iran’s Leaders Want a War With the United States

4. What If Iran Continues to Provoke the US Going Forward?

Trump’s Iran Decision Could Secure His Victory in 2020

As you know, President Trump decided last Thursday not to go ahead with plans to bomb multiple Iranian military facilities, in response to Iran’s downing of an expensive US military drone last week. Mr. Trump initially received widespread, bipartisan praise for his last-minute decision not to bomb Iran. Even liberal news outlets praised him initially.

It didn’t take long for that to change, of course. Less than 24 hours after his decision to call off the mission, the liberal media turned on the president, calling him indecisive, weak and even a “coward.” Yet as I will explain below, I believe President Trump made the right decision. If I’m right, it may prove to be the best decision he ever made. Here’s why.

While I have not heard anyone in the media (on either side) say this, I believe Trump’s decision on Iran will go a long way toward getting him re-elected in 2020. There are plenty of other ways we can punish Iran without killing innocent people. President Trump decided he did not want to kill people. I applaud him for that!

While those on the Left still despise the president, and have already resumed their vicious attacks on him, there was at least a brief moment of bipartisan agreement that President Trump made a wise decision last Thursday.

While some far-Right conservatives expressed disappointment over Trump’s decision to call off the bombings, I believe his decision will influence many Independents to vote for him in 2020. If he doesn’t do something else to screw it up, I think his decision to cancel the bombing of Iran may push him comfortably over the top next year.

I know that plenty of my clients and readers don’t care for President Trump. Heck, there are a lot of things I don’t like about him – I’ve made no secret about that. Yet I believe Trump was the most presidential of his time in the White House last week. I appreciate the fact that even many on the Left agreed. The right decision is the right decision, regardless of your Party. 

How the US & Iran Got to This Very Dangerous Place

The short answer is that Iran’s economy is suffering depression-like conditions as a result of crippling US sanctions imposed on the rogue country in 2018 and even more this year. But to fully answer this question, we need to go back and examine how our unilateral sanctions put Iran in this desperate situation. This is important because if we go to war with Iran, I think we can kiss the bull market in stocks goodbye.

On May 8, 2018, President Trump withdrew the US from the Iranian nuclear deal, formally known as the Joint Comprehensive Plan of Action (JCPOA). This action fulfilled a campaign promise to scrap the Obama-era agreement, despite objections from some members of his cabinet, the Europeans and others. The other signatories to the deal – France, the UK, Germany, Russia and China – all said they would continue to honor the agreement with Iran, despite the US withdrawal.

Then on May 21, 2018, Secretary of State Mike Pompeo laid out the Trump administration’s 12 demands on Iran and a new “maximum pressure campaign” against Tehran. Among other demands, the agreement called on Iran to give a full accounting of its nuclear program and to withdraw support for terrorist proxy groups in the region. Of course, Iran did not comply.

So, on August 7, 2018, the Trump administration reimposed the first round of sanctions on Iran, originally lifted as part of the nuclear deal. Those sanctions targeted Iran’s finances, with the goal of squeezing the economy. Then on November 5, 2018, the US intensified the maximum pressure campaign on Iran with a new round of sanctions targeting Iran’s oil and banking sectors.

On May 8, 2019, the Trump administration imposed even more sanctions on Iran, targeting its steel, aluminum and copper industries.

On May 12, Iran attacked four oil tankers in the Strait of Hormuz, a vital waterway for oil shipments. On June 13, Iran attacked two more oil tankers in the same area.

Then on Monday, June 17, we learned that Iran shot down a sophisticated US military drone valued at somewhere between $180 million and $220 million. The US said the drone was flying legally over international waters above the Strait of Hormuz; Iran claims it was shot down in territorial waters under Iranian control.

President Trump ordered the military to put together a plan to counterattack Iran. The plan was to have US planes and warships attack three specific targets in Iran. The plan was scheduled to launch last Thursday, June 20.

It is reported that just before the planes were to take off on the mission, President Trump asked the Generals how many people they expected to be killed in the attack. The Generals reportedly came back to the president with an estimate of 150 people that could be killed.

President Trump immediately canceled the mission. He reportedly told the Generals that the killing of 150 Iranians in the counterattack would not be a “proportionate” response to the shooting down of an unmanned drone. Again, I believe it was the right decision.

Why Iran’s Leaders Want a War With the United States

All of the sanctions noted above remain in place today and have crippled the Iranian economy. Iran has no good options. It can continue to suffer through depression-like economic conditions as a result of the sanctions. Or it can capitulate to US demands to dismantle its nuclear program and stop supporting terrorist groups in the region.

The first option – sanctions continue indefinitely – is a dangerous one. While Iran’s leaders live in luxury, the Iranian people suffer in dreadful economic conditions. The risk is that the people of Iran will revolt against their leaders and take their country back. The second option – capitulate to US demands – is apparently not an option the Ayatollahs will consider under any circumstance.

Given this untenable situation, Iran’s leaders have turned to violence. One Iran expert, Afshon Ostovar of the US Naval Postgraduate School, says the Iranians attacked six international oil tankers in the Strait of Hormuz in May to get the world’s attention focused on Iran’s plight.

Ostovar further believes that Iran’s leaders purposely shot down our hugely-expensive drone, hoping that the US would launch a military attack on Iranian soil. He believes that Iran’s leaders have thought this through and are willing to lose a military base or two, some missile batteries, some naval vessels and the like – and some of its people.

This, they believe, would make the US the aggressor in the world’s eyes and Iran the victim. Ostovar also believes Iran’s leaders are confident the Iranian people would rally around the Ayatollahs if the US attacks militarily and kills people on Iran’s soil.

President Trump decided not to take the bait, despite the advice of some of his top Advisors.

While I agree with the decision President Trump made last week not to attack Iran, there is a bigger issue to consider.

What If Iran Continues to Provoke the US Going Forward?

I mentioned earlier that the mainstream media initially praised President Trump for his last-minute decision not to attack Iran last week. I also said it wouldn’t be long before they would go back to attacking him. Over the weekend, I read numerous mainstream media stories that characterized the president as being indecisive, weak, couldn’t pull the trigger and even a coward.

While we can agree or disagree on whether Mr. Trump’s decision to abort the attack on Iran was the right move, the bigger question is what will happen if Iran continues to provoke the US. There is no question that Iran’s leaders now believe President Trump is weak and indecisive.

This may embolden the Iranians to commit additional acts of provocation, maybe even more serious ones that could take American lives. The Iran expert referred to above, Afshon Ostovar, believes that if the Iranian leaders are smart, they will take their perceived victory over President Trump last week and quiet things down.

Yet he also acknowledges that Iran’s leaders may feel emboldened to make more provocations in the weeks or months to come – especially since he believes that Iran wants the US to attack and spill Iranian blood on its soil.

Hopefully, the Iranians are smart enough to know that just because President Trump reversed his decision last week and called off the military attack on Iran, he can certainly reverse course again if there are additional provocations. We did launch cyberattacks on Iran late last week, and a new round of sanctions were announced on Monday (see articles below).

In closing, I suspect I’ll get some flak from a few of my more conservative readers for agreeing with President Trump’s decision to call off the bombing of Iran at the last minute. However, I believe that if we had bombed Iran and killed Iranians on its own soil, that would have been the “green light” for Iran to take American lives – which would lead to a major war – and the end of the bull market in stocks (my opinion).

Feel free to agree or disagree. I’ll leave it there for today.

Best regards,

Gary D. Halbert

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