The markets are closed, but the cost of this conflict is already being tallied. A baby shot dead by Israeli troops during a funeral procession in the West Bank. That is the headline, and it is a damnable one. Let us examine the ledger.
Initial reports suggest the infant was killed during a confrontation between Palestinian mourners and Israeli Defence Forces. The funeral, for a Palestinian killed earlier, became a flashpoint. Now we have a dead child. The international outcry is predictable, but the financial implications are what concern me.
First, the shekel. It will weaken. Not because of moral outrage, but because of uncertainty. Capital flight from Tel Aviv to New York or London is my expectation. Gilt yields may see a slight dip as safe-haven buying kicks in. But the real damage is to the 'Israel risk premium'.
Second, the Oslo Accords are effectively dead. Any talk of a two-state solution is now a historical footnote. This shooting burns the last shreds of credibility. The Palestinian Authority loses face. Hamas gains recruits. That is a geopolitical liability that investors will price in.
The EU will issue a statement. The US will express 'concern'. But nobody will do anything. Because nobody ever does. We will have a cycle of violence, another UN resolution, another pointless inquiry. And the markets will yawn, adjust, and move on. Until the next crisis.
Fiscal responsibility? There is none here. Both sides spend billions on security and military. That is dead capital. It does not build schools or hospitals. It builds checkpoints and walls. The opportunity cost is staggering.
I ask: what is the price of a child's life? In financial terms, it is zero. There is no derivatives market for human tragedy. But in geopolitical terms, it is a liability that compounds daily. This is not about left or right. It is about the bottom line. And the bottom line is red.
The markets will open in a few hours. Watch the Tel Aviv 35. Watch the yield on the 10-year Israeli bond. They will tell you the real story. Not the politicians, not the pundits. The numbers. They never lie.
