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Arab conflicts
And, courtesy of my friend Lazlo Birinyi, you can see the history of market and energy sector performance around Arab-specific conflicts:

Prior Arab-Israeli Conflicts:  1965-2006

Start	End	Conflict	Operation Summary	S&P500 % change	Energy Sector % change
6/5/1967	6/10/1967	Six-Day War	Fought between Israel and Egypt, Jordan, Iraq and Syria	1.34	1.98
6/1/1968	8/7/1970	War of Attrition	Limited war between Egypt and Israel. Ended with cease-fire signed in 1970.	-19.28	-15.18
10/6/1973	10/26/1973	Yom Kippur War	1973 Arab-Israeli war between Israel and coalition of Arab nations led by Egypt and Syria.	1.63	-0.71
3/14/1978	3/21/1978	Litani	Israel invades southern Lebanon.	0.38	2.48
6/6/1982	8/30/1982	Lebanon War	Israel defense forces invaded southern Lebanon in response to assassination attempt.	10.97	-7.74
7/25/1993	7/31/1993	Accountability	Israel launches week-[long attack against Lebanon to strike directly at Hezbollah	0.84	5.31
4/11/1996	4/27/1996	Grapes of Wrath	Sixteen-day military attack against Lebanon targeted at Hezbollah.	1.49	1.20
9/28/2000	10/31/2000	"October Riots"	Violent riots in which main roads were blocked while banks and stores were set on fire.	3.23	-2.15
4/3/2002	5/10/2002	Defensive Shield	Israel enters cities and villages to root out terrorists.	-3.62	-6.76
5/18/2004	5/24/2004	Rainbow	Military operation in Gaza Strip.  Israel's aim was to clear terrorist infrastructure.	0.52	-0.54
9/30/2004	10/15/2004	Days of Penitence	Israeli operation in Gaza Strip to destroy launching sites of rockets.	-2.00	1.29
6/28/2006	-	Summer Rains	Israel mobilizes thousands of troops to suppress rocket attacks against its civilian population.	0.45	1.97
7/12/2006	-	Current Conflict	Israel struck at Hezbollah in Lebanon in response to rocket attacks.	-	-

Source: Birinyi Associates, Inc

The real market story
Global turmoil aside, though, I continue to think the most significant market drivers are the economy, trends in inflation and interest rates, and the related drawdown of global liquidity. Some hope rests on Federal Reserve Chairman Ben Bernanke’s semiannual monetary policy report to Congress on July 19. In advance of his statements, expectations for future rate hikes have eased, with fed funds futures showing the odds of an Aug. 8 hike falling from 90% three weeks ago to less than 65% today. Bernanke may indeed evidence the slowdown in the economy, but he may be hard-pressed to talk more dovish on inflation in light of continued upward pressure on core CPI.

And of course, it’s not just the U.S. Federal Reserve about which the markets are worried. There have been 90 rate hikes globally, including Japan (finally) last Friday, with the Bank of Japan bumping rates up to 0.25% from 0%.

There’s a reason for the phrase, “don’t fight the Fed.” Rate hikes hurt—they hurt consumers and they hurt business, and they could increasingly hurt earnings.