Meet the new boss. Same as the old boss. Now ascending the Iranian “throne” is Mojtaba Khamenei, son of the late Ayatollah Ali Khamenei. Same beard, not quite as long as Daddy’s and with a dash of pepper in there that Daddy must have lost decades ago. According to the New York Post, the younger Khamanei is lacking aspects his father had and yesterday posted on Facebook that he had “the charisma of a boiled potato.”1 At least it wasn’t mashed potatoes I suppose. The BBC pointed out that Iranians are divided on the succession of the son, but while that may be the case, the ease of installing the younger Khamenei and promoting his near apotheosis in the eyes of the ruling mullahs and the powerful Islamic Revolutionary Guard Corps (IRGC) wins out over other potential candidates for the throne.
A man on the street interview conducted by the BBC in Tehran was rather bleak2. “Even the thinnest of chances for a change are no more within the system,” said a man in his 30s. “So everything will remain much the same: they don’t even need to change their chants to support the [new leader].” A second Tehran resident interview described him as vengeful and “If he can’t take revenge on the US, he will take it out on us ordinary people. I hope that Israel and the US will target him.” Other interviews echoed the same fear of the new hardline boss, same as the old hardline boss.
Young Khamenei finally has spoken out and said the Strait of Hormuz must remain closed and it’s a “tool to pressure the enemy.”3 He threatened US bases and also to jack up the cost of oil to $200 a barrel. Not to worry though as US Energy Secretary Chris Wright, no relation, said that global oil prices are “unlikely” to hit $200 a barrel as crude tankers are still held up in the Strait of Hormuz4. “Unlikely” he said. Way to assure the American public and make the Wright clan look bad at the same time. $120 oil is a problem. $150 oil is a near catastrophe. $200 oil, and all you can say is “Unlikely”?? I’ll borrow one from all the texting teenagers and just say smh.
When the news hit of the release of $400 million barrels of oil reserves by the International Energy Agency it absolutely lowered the price of oil – very briefly – before they quickly jumped higher to over $90 a barrel5. Last night, President Trump announced the US would release 172 million barrels from the Strategic Petroleum Reserve, though the promised help is actually 4 months away6. As we go to press with this, the price of oil is now $95.28 a barrel.
You may have noticed we’ve had more days of red than green lately. The markets are reacting. Fortunately, our Investment Committee was proactive, having raised cash in our growth portfolios before much of this damage was done. That may be important opportunistic buy-in money if the market sinks further. If the market doesn’t drop and portfolio values creep higher, at least we were cautious in a time when prudence is advised.
Meanwhile, there’s this unknown AI technology aimed at the labor market. Employers blamed Artificial Intelligence as the reason for 12,304 job cuts in January and February7. Block CEO Jack Dorsey announced that they would be laying off 40% of their workforce as they would lean on AI to replace them. Amazon is eliminating 16,000 roles at the company. If you’ve seen any videos of their warehouses, you’ll see a mass of robots on wheels carrying packages to conveyor belts to be sorted. Amazon’s Blue Jay robots can pick, stow and consolidate items, all in one station8. While Amazon didn’t blame AI for the cuts, it’s hard not to see the impact those bots must be having on their warehouse floors.
In perhaps the most insulting of all the layoffs, Atlassian announced it was laying off 10% of its workforce to move squarely into artificial intelligence and enterprise sales. Shares rose 2%. Why do I call the layoffs insulting, you ask? The ticker for Atlassian is TEAM. How ironic it is that they are putting their own team last.
Some, such as J.P. Gownder of research firm Forrester, are skeptical of so-called AI-washing, which refers to a company dropping the name of AI to sound advanced instead of admitting sometimes companies are forced to make tough financial decisions to improve their bottom line. It could be a very convenient scapegoat seeing how Dorsey’s company stock is down 75% and all. And poor goats don’t deserve that treatment.
All is not lost. Companies and countries are innovating everywhere. The Iron Beam, a laser in Tel Aviv, part of Israel’s Golden Dome is shooting down missile after missile with a huge laser beam. That’s right … a huge laser. This excites the young Star Wars kid inside me. There are rapid advancements being made in photonics, submersible ROVs, drones, and yes, Artificial Intelligence. It’s the Year of The Scientist. It’s the Year of The Engineer. The world is swiftly reshaping around us and the companies we invest in could be beneficiaries of this tech renaissance. The companies and surrounding companies of the new technologies could carry the market to new heights.
We have to take the bad with the good and keep rolling forward. The one thing Energy Secretary Chris Wright said that should resonate, is that the US is now a net oil exporter, not an oil importer. A lot has changed as the US is now more energy independent. An oil crisis 20 years ago would have been orders of magnitude worse. We have a lot to be thankful for. Let’s count our blessings and move forward constructively together. If you want to talk about geopolitics, innovation or other market factors, please give us a call. If you listen to us, we’ll change your financial world …
Sincerely,
Scott Wright
Portfolio Manager
The Wealth Training Academy
(Marketing Disclaimer: Past performance is never a guarantee of future results. We offer a lot of services. Our planning, tax, and insurance strategies are designed to improve financial outcomes when implemented as recommended. We’re confident in these strategies, but results will vary based on individual circumstances. Investment results cannot be guaranteed. Unless otherwise indicated, no third party individuals mentioned in this article are clients of our firm, nor have they been compensated for appearing. This article is for educational purposes only – we do not recommend anyone buy or sell any security discussed here. Instead, we recommend readers call our office for personal advice about your circumstances! ~The Compliance Department.)
Sources:
1New York Post – “The charisma of a boiled potato.” | Facebook
2Iranians deeply divided over Mojtaba Khamenei’s rise to power
3Iran’s supreme leader Khamenei: Strait of Hormuz must remain closed
4Oil unlikely to hit $200 a barrel, US energy chief says By Reuters
5Major, multi-country oil release deal fails to bring down prices
6President Trump says he will tap strategic petroleum reserve to cut energy costs
7Block, Amazon drive tech layoff surge, intensifying AI debate | CFO Dive
