Iranian Sanctions
Research for Online Investors

by John Dalt

10/8/10

The U.N. Security Council has tightened sanctions on Iran for the fourth time this summer.  Sanctions are meant to bring Iran to the table on their nuclear program.  The latest sanctions tightened financial transactions and put pressure on multinational corporations doing business with Iran.  Russia cancelled the sale of anti-aircraft missiles.  These could have been used to thwart an Israeli raid on nuclear plants.

Enforcement of financial transfers caused a run on the Iranian rial late last month, leading to a depreciation of 15%.  Iranians ‘mobbed’ currency dealers, desperate to buy dollars before the value of the rial dropped more, according to the Economist.  The Iranian government had to flood the country with U.S. dollars to calm the market.

China and Turkey are ignoring the sanctions and expanding their trade with Iran.  China disavows any sanctions concerning the oil and gas sector.  The latest sanctions are meant to cut off imports of refined fuels (gasoline) to Iran.  They do not have enough refining capacity to supply their economy and must import up to one-third of its needs.

There have been riots over the cost of gasoline in the past.  The government subsidizes retail sales.  Retail prices run as low as $0.10 per liter.  According to Reuters, Tehran is maneuvering to supply the market around sanctions, and withdrawing the subsidies that keep retail prices below market level.

James Bullard, St. Louis Fed Reserve Bank was on CNBC early this morning.  He was talking about quantitative easing and the Fed’s buying up to $100 billion per month of Treasury new issues.  I was impressed by his answers, until he said ‘that doesn’t mean hyper-inflation is just around the corner’…”We are smarter than that.”  We wonder…

Liu Xiaobo won the Nobel Peace Prize this morning, much to China’s distress.  We wrote about Liu and China’s overt pressure on Norway Wednesday in Currency Wars.

China’s Foreign Ministry spokesman Ma Zhaoxu called the award an “Obscenity against the peace prize.”  This award is a follow up of the ‘obscenity’ by the Nobel committee award in 1989 of the peace prize to Tibet’s exiled spiritual leader, the Dalai Lama.

We enjoy a stick in the eye of the Chinese.  After all, we in the west have had to endure awards to Al Gore and Obama.  Imagine the celebrations in China on those two.  You can read more about the Nobel awards on Reuters.

This morning, the Labor Department reported that nonfarm payrolls (jobs) decreased by 95,000 in September. Today's chart puts the latest data into perspective by comparing nonfarm payrolls following the end of the latest economic recession (solid red line) to that of the prior recession (i.e. 2001 recession -- dashed gold line) to that of the average post-recession from 1954-2000 (dashed blue line). The current jobs recovery is much weaker than past job recoveries that follow the end of a recession. Today's chart illustrates that the current jobs recovery is following a path that is very similar to what occurred following the recession of 2001.

To the mailbag:
The government, Fed and banks tactics on inflation may not work.  It will force people to cut back and only buy necessities. ..As soon as they think they have enough individuals participating in the stock market again, they will yank the cord .---paid up subscriber T.M.

John’s reply:  Do you really think they are doing this to manipulate the economy and market?  I am shocked.

It's so good to hear straight forward frankness.  It's telling as to why we give away so much in foreign aid.---subscriber G.C.

John’s reply:  How good are your friends, when you have to buy them?

Enclosed is my check for $200 bucks.  Please sign me up for the Long-Term Portfolio.  I have enjoyed the free subscription.  I have already gotten $100 worth of information from MarketToday.  I don’t know how you keep up with all the information you provide every day.---new paid up subscriber G.M.

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities.  The editor may have held a position in a security earlier, or in the future.

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