War with Syria-China Damages $VXX $VIX $DJX $SPX $FXI $EWH $OIL $GLD

War with Syria is almost a safe bet. Syria’s sponsor and pay master will not stand by idly and watch the Alawite’s lose control. They cannot go to other clients and ignore losses in Syria without putting up a fight.

While Iran will be nasty it will not ultimately destroy the US. Iran’s best bet will be a shadowy terrorist war trying to hurt America. But how to bring Iran to its knees. It takes money to be a terrorist. That means oil sales. Much Iranian crude goes to China. By boat through the Straits of Singapore.

The sudden disruption of oil supplies will disrupt the Chinese economy. Plants will shut or reduce. Public energy consumption will be curtailed. Brownouts and long line ups at the gas pumps. It will pay to be a member of the communist party just for the gas privileges.

Reduce China exposure or if you are brave enough short. In the meantime China will be throwing around its huge reserves of western currency especially the US Dollar buying up whatever oil it can get its hands on.

Watch for selective destruction of Iran’s oil infrastructure. Opportunistic. Much of the infrastructure is old and crumbling. Destroy enough to cripple the Mullahs and spark an overthrow. Then bring in Western Oil Technology and bring everything up to date. About a year for the round trip.

In the meantime China takes it on the nose so sorry. Globalism is a double-edged sword.

George Gutowski writes from a caveat emptor perspective. Follow him on Twitter @financialskepti