When it comes to geopolitics, there are no coincidences. I have learned by experience to always calm down to evaluate a situation and avoid rushing into an emotional response. This piece is about the situation that developed in Israel over the weekend.

Like anyone else, I still have many questions. And of course, the sources of legitimate information aren't much. However, I have tried my best to avoid any rush to an emotional conclusion. From all I have learned since the weekend, it seems like lasting peace is not possible in that region for now.

The biggest puzzle for me was how an attack on Israel was possible given how advanced the Israeli intelligence is. I saw videos of people on X who served in the military in some capacity commenting on how it was impossible for Israeli intelligence not to see the attack coming. That complicated my understanding of the whole issue.

But one thing remains sure. Whenever there is global conflict, it is always some people taking advantage of two groups who hate each other. The real villains are not on the two sides fighting. It is always about those who set them up to fight. And those people we will never know, at least publicly. (If you want to know, follow the money. It takes serious money to launch such an attack).

But economically speaking, global conflicts present so many financial opportunities that it is hard to think they are not engineered because of the financial benefits. People get rich from wars. It is sad, but it is what it is.

Here are 5 things to watch for the next couple of weeks as this Middle East conflict lingers:

1. US Treasuries (or Bonds)

This conflict just changed the narrative on US bonds. Aside from a Middle East conflict serving as a distraction from the debt problem of America, bonds surge when there is conflict. Especially with this kind of conflict where an escalation is very likely.

And this is not because bonds have become a good investment. Instead, it is because there are no other options. Equities will likely take a beating because businesses cannot be conducted as usual and that will reduce revenues and profit margins.

But the fundamentals of bonds are going to get worse though. This is because the US will be forced to spend on war funding for Israel. And that will further increase the size of the national debt sharply.

Personally, I would still not invest in bonds though. This is because the situation around other things is just temporarily worse. And it will get better sooner or later. But the situation with the debt crisis is permanently terrible with no answers in sight.

In fact, I am predicting a kind of emergency situation where the US is going to cancel its own debt and refuse to pay bondholders. We are still far from that kind of extreme, but I wouldn't take the chance. The interest payments are now over $1 trillion.

The bond market is closed today, Monday, in the USA. But that of other countries are open. German bonds are surging. Investors are kind of rushing into bonds. I would stay in select equities and cash over bonds.

2. Oil Price

Every time there was any kind of crisis in the Middle East, oil prices have gone up. I was sharing with a friend today that if I were an active commodity trader, I would place a huge bet on crude oil right now.

And not just crude. Every commodity that needs to go through the Middle East will be pricey right now. And this is because this fresh conflict will not be over soon.

This is one of the conclusions I have come to. Just like the Ukraine crisis, this Middle East crisis will linger for a while. And it will greatly disrupt the global commodities market and most definitely crude oil.

3. Companies that Manufacture Military Equipment

War is a business. It is sad, but there are people right now who are delighted because war has broken out in the Middle East. For them, it is time to make big money.

When countries are at war, they don't think or rationalize. Instead, they just spend emotionally. They are emotionally invested in "winning" the war. And that looks very ugly in real life. But it looks fantastic in their revenue books.

Companies that manufacture military equipment are going to get richer. And one of the signs of de-escalation is when stocks of those companies start to trend lower.

4. Taiwan

My focus on Taiwan is back up to the top radar. Let me explain why. The US is going to be stretched fighting a war on two fronts.

On one hand, it is funding Ukraine. On the other hand, it will be funding Israel. (If the US government won't fund Israel, Wall Street will). And all of this is on an already stretched US economy.

People keep saying the US economy is resilient, but people are actually struggling more than before. Banks are sitting on hundreds of billions in unrealized losses on treasuries. The interest rate is high (which means businesses can't refinance at a low rate like before). Inflation remains a monster. Credit card debt is rising.

If China should invade Taiwan, I don't think the US can stretch to deal with everything going on. In fact, it might happen so quietly that people barely notice.

China is determined to play the US. And currently, the US looks like it can be played a fool. So, I will be keeping an eye on Taiwan to see if China makes any move behind the prying eyes of the world.

5. The US Dollar

The USD is still king. It is still the global reserve currency. It is still a safe haven. No matter how bad things get in America, the global demand for dollars remains very strong.

With this conflict, the demand for dollars is only going higher. Even though the USA has multiple economic problems, the dollar will remain strong and dominant except (and unless) another currency dethrones it as the global reserve.

As a bonus point here, I will also be keeping an eye on bitcoin. This is the kind of situation that causes bitcoin to enter a new bull cycle. With increased geopolitical risk, more people will be looking to risk-free assets to store their wealth.

Bitcoin has volatility. But this time, the volatility tendencies are more to the upside.

For investors to hedge this geopolitical risk, they have 3 options;

• Buy bonds

• Buy dollar (and keep cash) or buy bitcoin

• Buy defence stocks or short equities

In my opinion, I would stick with the second option while maintaining my position in select equities.

Conclusion

War is business. Some people are getting rich from the recent conflict outbreak in the Middle East. Sad, but true. The 5 things you should be watching are:

1. Bonds (US Treasuries)

2. Oil price

3. Companies that manufacture military equipment

4. Taiwan

5. USD (and bitcoin)

This is a perspective, not financial advice.

Stay rich.