This week

Libya is a mess, but it's priced in to the markets.  Qaddafi is going to be killed or will flee the country, and Libya will require international assistance.  The only question is whether that assistance will begin by covert methods of speeding the removal of Qaddafi, or after the people/protesters/etc. declare victory and formally request it.  The protests in Iran and Algeria don't seem to be amounting to anything, but they do in Yemen and Bahrain (which is geopolitically more important than Libya).  The only other geopolitical disturbance has been N. Korea threatening to attack the South if they don't stop sending balloons filled with leaflets.  Yawn.

Ireland's election results are not likely to materially change the terms of the bailout (unless the ECB flatly refuses any changes, forcing Ireland's new PM to talk about haircuts so as not to look weak; not my base-case scenario, though).  My base-case is that superficial terms will be "renegotiated" / changed, e.g., some bonds will have their interest rates reduced.
Portugal looks ripe for a bailout, having to redeem bills and bonds in excess of €9 billion over the next 2 months.  They are supposed to auction bills on Wednesday to cover a buyback, but we'll see if they're able to pull it off.  Without another large ECB intervention buying up their bonds, they will be forced to accept a bailout (very politically unpopular...will it be accepted?).  The longer Portugal delays, the higher the risk that contagion spreads to Spain, which is a can that can't be kicked down the road.  There's supposed to be a "plan" set in place by euro leaders this month.  A statement will likely be issued that 'all members agree on reducing deficits, etc., etc,' but in reality, Germany's guarantee of further bailouts requires more changes from the peripheral countries than they are willing to accept.  And its still uncertain what the recent elections in Hamburg mean for future German bailouts, despite Merkel's rhetoric. 

Iran

3/3/11 Update:  Those 2 warships just passed the Suez on their way back to Iran...

In pondering Iran's strategy, it occurred to me over the last few days that the 2 Iranian warships heading to Syria are bait; Iran wants Israel to attack them.  Iran could then open a front on land through its proxies in Syria and Hezbollah.  If Israel attacks now, the overall conflict would be smaller, but Iran would galvanize its population against their hated arch-nemesis, at a time when Iran is weak domestically.  If Israel doesn't attack (which I would bet on - their best play to is hope the Iranian regime collapses from within), Iran will gradually increase their naval presence in the eastern Mediterranean; that will mean a conflict is inevitable, where Iran would attack through Syria and Hezbollah with naval support from its ships in Syrian ports (after Israel made a first-strike).
Geo-political events are extremely important in investing and trading, even though they don't always get the attention they deserve.  Even if nothing happens with the PIIGS in the immediate future, I think there are enough possibilities where oil-rich countries fall into chaos to keep the "risk-off" trade going for a while (don't ask me to define "a while").

Updating my Index

As I said in an earlier post, I had miscalculated something.  After going over the numbers, it was my first trade (16.5% loss) and fourth trade (9% loss).

This coming week

This week should be interesting, not just because signs of stress are showing in the Euro banking system, or the Irish elections on the 25th (how serious was FG, etc, about renegotiating?). 
Things are heating up in the Middle East and North Africa.  Libya, Bahrain, Yemen, Iran, even Algeria and Morocco to a lesser extent.  In Tunisia and Egypt, the leadership's response was to abdicate to the people (or at least those who "spoke for" the people).  Libya seems to be heading in the opposite direction.  The situation has a very Emperor Justinian/Nika riots feel to it.  That will be one of the major stories to watch this week.  How hard will the Libyan forces push?  Will that trigger violent opposition, or the slaughter of the opposition leadership and preservation of the status quo?  These same questions apply to Bahrain, Yemen, and perhaps Iran, as well.
This past week, of course, saw increasing equity prices.  My current bet is on a correction, and if one doesn't happen soon, I'm going to exit this position and re-evaluate.  But its been escalator-up, elevator-down, so if there is to be a bet placed right now, its to the down-side.

Exited Trade 5 / Opened Trade 6

WTI (contrasted to other grades, e.g. Brent) still may have some way to fall before X event changes its course.  Today, however, Israel made veiled threats against the two Iranian ships in the Red Sea heading for Syria.  The Strait of Hormuz (which Iran has vowed to close if attacked), unlike the Suez canal, has a significant amount of oil that passes through it each day.  There is only one likely event that could completely wipe out a short oil position, and its Israeli-Iranian conflict.  The magnitude of the severity, even if the probability is low (which I think it is in the immediate term) makes a short oil position a risk not worth taking.  Why not go long another grade of oil, then?  Well, if I were a hedge fund, I might consider it, but given my limited access to leverage, I can only play with the toys I have (i.e., I can only go long/short WTI).  Sold SCO at 11.70.  Total gain, including leverage = 19%.  But since I miscalculated the loss on a previous trade, I'm going to call it 16% for the Jano Index.
I also opened a short emerging market position.  In addition to commodities, they are extremely vulnerable to monetary policy tightening (or hints of), Chinese economic slowdown, PIIGS...well, you know what, pretty much anything at this point.  In a flight to safety or developed market tightening, the money leaves emerging markets quickly.  I may have entered early (imagine that), so I may pull the plug quickly.  Long EDZ @ 22.53.

Exited Trade #3 / Trade 4 / Opened Trade 5

Sold SCO on 1/27 at 10.73 - Loss, including margin, of 15%

Trade 4  1/28
SCO at 10.6, sold at 10.33 - Loss, including margin, of 6%

Trade 5
SCO at 10.65
I'm buying high and selling low for a reason (its an inverse ETF, so technically, I'm shorting low and covering high).  For trade 3, the buying was relentless, and not knowing where it might stop, I got out, tried to get back in on trade 4, but the lemming herd kept moving in the same direction.  The decision to get back in is, in addition to Mubarak resignation rumors, the U.S. is finanlly hinting that Mubarak should go, which means his departure is all but a done deal (there are scenarios where he might stay, e.g., the protests die down).  Overall, commoditites are surging at the moment, which gives me pause, but there is such a glut of oil, and Saudi Arabia has already made commitments to increase production to get oil back around $70-$80/bbl.  Now, they said the same thing in 2008 - and followed up their words with production increases - but the wave of liquidity chasing assets kept driving up prices.  It will do so again, but I think that's a story for the late spring / summer.  Right now, I still anticipate a correction - Irish elections, bank runs (in whatever form in whatever country), emerging market inflation/tightening/rioting/Pakistan, quickly rising U.S. bond yields, game of chicken with U.S. debt ceiling, U.S. state/municipal defaults (or vigilante action), etc, etc.  Alot of risk juxtaposed on a background of cyclical recovery.