By Gerald B. Goldberg, JD, CIMA®, CEO, and Co-Founder

“Let not any one pacify his conscience by the delusion that he can do no harm if he takes no part, and forms no opinion. Bad men need nothing more to compass their ends, than that good men should look on and do nothing.” – John Stuart Mill^[1]

On October 7^th, as part of a surprise attack carried out on the Jewish holiday of Simchat Torah, hundreds of Hamas terrorists infiltrated the State of Israel to murder and kidnap as many civilians as possible. After the launch of an initial rocket barrage, gunmen stormed into more than 20 sites on the border of the Gaza Strip, including towns, army bases, and a music festival.^[2]

In a single day, these terrorists killed more than 1,400 people and abducted nearly 200 others.^[3] Reports of torture, rape, and other barbarous atrocities being committed on innocent civilians are continuing to surface.^[4]

We can all agree that these attacks were depraved, vile, and wicked. We should be unequivocal, regardless of ethnicity, nationality, religion, or any matter of background, in recognizing and denouncing these acts for what they are – evil.

Acknowledging this evil does not in any way suggest that there are not complexities and thousands of years of historical context that envelope the myriad of disputes that exist in the Middle East, including those that pertain to the Arab and Jewish people. To not call out this evil, however, would be a supreme moral failure. In much of the public discourse, this seems to be forgotten; we must hold ourselves, our communities, our educators, leaders, and elected officials accountable to resolutely denounce evil in the world.

Our thoughts and prayers go out to all the victims of these heinous crimes. May their memories be for a blessing. As the situation continues to unfold, we pray for the innocent people and hope that stability soon returns to the region.

We ask that as you are reading this, you consider observing a personal moment of silence in empathy and solidarity with those who are still fighting for their lives and those who have lost loved ones.

In hopes of cutting through the noise and calling for unity here in the U.S., the remainder of this piece will cover the broader implications of this attack geopolitically and demonstrate why now, more than ever, we must stand up and stand together.

Geopolitical Implications
As disturbing as it is to think that anyone could celebrate these acts of barbarity, the Hamas attacks are welcome news to certain groups. Iran has been building up and supporting several proxies to extend its influence throughout the region. These proxies include Hamas in Gaza, Hezbollah in South Lebanon, and the Houthis in Yemen^[5]. Any success accomplished by these proxies translates to forward progress on the part of Iran to expand its influence in the Middle East.

At the time of the writing of this Journal, Israel is well into its operation aimed at dismantling Hamas in Gaza. However, conditions are heating up along its northern border with Lebanon where it has responded to and exchanged artillery and rocket fire with Hezbollah^[6]. If Hezbollah materially enters the current conflict, it will result in a significant escalation of hostilities and risk in the region.

As it stands, Russia is a primary geopolitical beneficiary. Any event that takes the war in Ukraine out of the headlines for a few days is welcome to the Russians, who have long sought to undermine the West’s continued resolve to aid Ukraine.

Moreover, considering the likelihood of increased American military aid to Israel, limited munitions supplies could mean less materiel support for Ukraine.^[7] Russia would also benefit from the current conflict expanding into a more regional one, akin to the Yom Kippur War or the Six-Day War. Oil prices would likely rise in anticipation of supply disruptions, resulting in economic benefits for a currently sanction-bound Russia, the world’s third-largest producer of oil.^[8]

An expanded conflict and higher oil prices would also make the Fed’s job of stamping out inflation more challenging. High oil prices tend to feed into prices more generally, as firms pass on rising input costs. Fearing a repeat of the 1979 oil crisis, when high energy prices contributed to “The Great Inflation,” the Fed will be keeping a close eye on how the situation unfolds.^[9]

Other Middle Eastern countries, though, will likely benefit from keeping the Israel-Hamas conflict localized. Iran, a Shia-majority theocracy, is engaged in a long-running hegemonic struggle with Saudi Arabia, a Sunni-majority monarchy, in a conflict that stretches throughout the Middle East.^[10] The current situation gives these countries a low-stakes way to paint Israel as an external enemy, helping justify their authoritarian models of government. In addition, the conflict serves to distract citizens from the suffering and inequities that permeate many countries in the Middle East, in part due to the ongoing broader Shia-Sunni conflict.

Unfortunately, this conflict has existed for more than 1,350 years and shows no signs of being resolved anytime soon. In an interesting twist to the current conflict, the Iranian support for Hamas is evidence of the ancient proverb “the enemy of my enemy is my friend.” Iran is a Shia country while Hamas is Sunni in its religious orientation. There is no love lost between them. However, Iran is willing to align itself with anyone who is also committed to the destruction of Israel.^[11]

In general, any country that considers itself a Western adversary benefits from this latest conflict, which has exposed internal divisions and could threaten the West’s resolve in countering aggression. Notably, this includes China, which has taken a more strident posture toward Taiwan in recent years. Relating back to the situation in Ukraine, any weakness or wavering of resolve on the part of the US and the Western coalition will be taken as an invitation on the part of China to exert a more aggressive tact vis-a-vis its relationship with its neighbors, including Taiwan.

These international strategic issues will continue to play out as the conflict develops. Domestically, though, these events must serve as a wake-up call for our divided nation.

In America: A Time to Rally and Unify
The deep divisions in the American political system have been evident for some time now, but the Hamas attacks have shone a clear light on the lack of unity within our nation. Now, more than ever, is a time for Americans to come together and resolve to oppose evil in this world. When America is divided, we are weak, and the world becomes a more dangerous and unjust place.

As our country experienced in the 9/11 attacks of 2001, unchecked evil can come to our doorstep. If our internal division means that we are unable to confront evil abroad, we may find ourselves having to confront evil at home. There is plenty on which we can disagree as fellow citizens, but the founding values of this nation should be common to all of us, and can bind us together to forge a renewed national vigor.

Last week, New York City Mayor Eric Adams delivered a powerful speech that fiercely condemned Hamas’ “destructive, despicable” actions and called for the perpetrators to be held accountable.^[12] That spirit and strength should serve as a rallying cry for our nation to unite around the distinctly American values of opposing evil, pursuing justice, and preserving the right to liberty.

Despite the unchecked evil of the atrocities we saw, many continue to practice moral relativism, creating convoluted justifications for the attacks. As reported by NPR, some have placed the blame for the violence entirely on Israel’s shoulders.^[13] These attitudes only serve to drive us apart, undermining the values that can bring us together.

We know that the flame of public discourse is often fueled by the most divisive voices. We know sifting through misinformation and finding truth is an exasperating exercise. But we, the rational, moderate majority, simply cannot justify staying silent.

It is only when we come together that we can not only oppose evil but begin to solve the real problems facing this country – including a fiercely partisan congress, the rapid spread of misinformation, and the perception that the systems of power are not working for the benefit of every American. Overcoming these issues will require a citizenry willing to work together again, built on a rediscovery of the values we all hold dear.

Conclusion
We know that there is a lot of noise surrounding the Israel-Hamas conflict right now and that it can be difficult to find accurate information. We hope that the preceding recap served as a brief primer on the major themes at play and how the events could impact both domestic and international politics.

As you search for further answers on these topics, be mindful that events in the Middle East are a frequent subject of misinformation. Since we spend considerable time studying and analyzing this region, and as a result have significant knowledge about the broader context, we would be happy to delve into these subjects at greater depth and act as a source of dispassionate and objective information to answer your most pressing concerns.

As we look to the future, the most salient issue for capital markets remains inflation, particularly given renewed worries of high energy costs leading to a new surge in consumer prices. The extent to which the Federal Reserve will launch further rate hikes in order to contain or preempt this inflation are a significant source of uncertainty.

Further, the economic decoupling between East and West continues to play out, a dynamic we explored in a 2021 edition of Gerry’s Journal.^[14] Further conflict, like that between Israel and Hamas, will only accelerate this trend.

While these dynamics are a reminder of the unpredictability of markets, the best way to navigate such uncertainty remains a well-diversified portfolio designed around a disciplined investment strategy. Market turmoil is inevitable, but a well-built financial plan is constructed to weather storms in pursuit of long-term goals.

If you have any questions about the unfolding events or their implications for geopolitics and capital markets, we invite you to contact our office today for clear-minded answers. As always, our team remains committed to serving you and your family – no matter what the future holds.

The views contained in this document represent the opinions of GYL Financial Synergies, LLC as of the date hereof unless otherwise indicated. This and/or the accompanying information was prepared by or obtained from sources GYL Financial Synergies, LLC believes to be reliable but does not guarantee its accuracy. This document contains forward-looking statements, predictions, and forecasts (“forward-looking statements”) concerning our beliefs and opinions in respect of the future. Forward-looking statements necessarily involve risks and uncertainties, and undue reliance should not be placed on them. There can be no assurance that forward-looking statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. The report herein is not a complete analysis of every material fact in respect to any security, mutual fund, company, industry, or market sector. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Past performance does not guarantee future results. CAR20231019GJOCT

^[1] HathiTrust, Inaugural address; delivered to the University of St. Andrews, Feb. 1st, 1867

^[2] New York Times, What We Know About the Hamas Attack and Israel’s Response Link

^[3] The Washington Post, How Hamas’s carefully planned Israel attack devolved into a chaotic rampage Link

^[4] Reuters, Israeli forensic teams describe signs of torture, abuse Link

^[5] Wilson Center, Iran’s Islamist Proxies in the Middle East Link

^[6] The Times of Israel, Northern border heats up with fresh rocket fire, Hezbollah attacks on IDF posts Link

^[7] Financial Times, US faces hurdles in ramping up munitions supplies for Ukraine war effort Link

^[8] International Energy Agency, Oil Market and Russian Supply Link

^[9] Federal Reserve History, The Great Inflation Link

^[10] BBC, Why Saudi Arabia and Iran are bitter rivals Link

^[11] CNN, Hamas and Iran are longtime allies. Did Tehran help with its attack on Israel? Link

^[12] New York City Government, Transcript: Mayor Adams Delivers Remarks at “New York Stands With Israel” Rally Link

^[13] NPR, U.S. students are clashing over the Israel-Hamas war. What can colleges do? Link

^[14] Gerry’s Journal, Enduring: Perspectives for the 4th Quarter Link