Obama's Speech Thursday Might Change the World, Move Markets

President Barack Obama is scheduled to give a major policy speech Thursday, articulating his administration's view of the recent people-led democracy movements in the Middle East, along with the stalled peace process between Palestine and Israel. The speech, which comes nearly two years after his 2009 Cairo speech, where he began the process of healing the rift between Iraq and America, has the potential to serve as the pivot point for the Middle East and the American approach to foreign policy in the region. Exactly what Obama will say is unknown at this time, but the speech promises to be “fairly sweeping and comprehensive,” according to White House spokesman Jay Carney. The President is expected to weave a narrative thread throughout the region, starting with the movements that toppled governments in Tunisia and Egypt. He will also likely talk about Syria, Libya, and other nations in the general Middle East/Islamic Africa region that are considering or are undertaking popular resistance movements to overthrow their violent, oppressive, and non-democratic leadership. The level of support that Obama will announce might prove to be a spot where his soaring rhetoric cannot be matched with actions on the ground. It would be one thing to announce support for democratic movements across the Middle East. It is quite another to commit funds, troops, equipment, or other tangible assets toward those ends. Then again, sometimes just the support of America and the western world can work wonders, giving the silent majority present in each totalitarian regime a reason to reconsider the steady tyranny in favor of an upheaval and democratic reforms. Obama also has some recent, tangible actions he can point to in his speech as examples where his Administration acted on behalf of freedom and democracy in the region. He helped push former Egyptian President Hosni Mubarak out the door after Egypt revolted, and he supported the NATO campaign of airstrikes in Libya in support of rebel groups there. Obama has also laid down economic sanctions on Syria after it cracked down on dissidents there, including freezing the assets of President Bashar al-Assad. It has not, to date, acted on Bahrain's similar crackdown. Bahrain is a key regional ally of the United States and may play a role in reforming the overall region. Still, Obama may risk rocking the boat with the small ally nation in the name of ideological consistency. The speech was prompted by some very game-changing events in the region since Obama was elected in 2008. We have seen "more change in six months in that region of the world than we've seen in 60 years," said Carney. Traders should be prepared for just about any reaction to the speech. A positive, upbeat may cause the market to rally, particularly if Obama announces a true beginning to the end of troops in Afghanistan and/or Iraq. If he can take a believable tone of “peace with Muslims” and “the elimination of extremism in every form”, he may be able to tamper down the uncertainty that is priced into a barrel of oil. That would leave a lot of room on the short side of trades involving oil. Then again, if his speech brings on more uncertainty, he could be adding volatility and price to an oil commodity market that has doused fuel consumers the past month. Plus, any declines might be offset by the usual demand increases that come with Memorial Day and the summer driving season. Foreign exchange traders should also be prepared for a hectic day, as any gains or losses in oil will likely be matched with an inverse action for the dollar. As we get closer to Thursday's speech, when more details are likely to be released to the media, we might see signs of how this major policy speech will play out for the markets. For now, hang tight and stay tuned to

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