The Guest Blog

Busch: Welcome Back Mr. President!

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From underwear screening to health care to a nuclear ultimatum from Iran, President Barack Obama has 2010 start with his agenda driven by events and not choice.

This is the nature of the beast and Obama's management skills will be tested this month.

Let's do a quick list of what's happening and the major questions to resolve.

1. The Xmas Eve terrorist attempt and the fall out from the lack of CIA communication. Should a head roll and will this help?

2. Yemen as an almost failed state that is housing terrorists. What to do and how much military activity to respond with?

3. Iran missing the 12/31 UN deadline and the internal strife. Will the US (and others) call for action and will the US officially support the opposition in Iran?

4. Afghanistan and Pakistan. Will the surge work and will Pakistan withstand the surge in terrorist bombings?

5. Healthcare. The House version is what Obama wants versus the Senate version that is more likely to pass. Will Democratic Senators get nervous over the "Ben Nelson" effect?

For the markets, the Iranian/Yemen situation is inserting a price premium into oil. The major question always and everywhere is the potential closing of the Straits of Hormuz. This is where 40% of the world's oil flows through and would disrupt global economies if it was shut down for any length of time. Iran is planning a major military exercise in February that will make everyone nervous if it will be just an exercise. Watch for the imposition of military rule as the indicator that internally Iran is ready to devolve into civil war.

The secondary question would be if Yemen terrorists decide to re-start their program for attacking Saudi oil facilities. Given the stepped up attacks by the US and Yemen government, the AQ faction in Yemen could decide it wants to flex it's muscle in Saudi Arabia. Already, the US, France, and UK have shut their embassies in Yemen. Brown described Yemen as a failing state and will convene a January 28th security conference on Yemen in London.

Afghanistan and Pakistan have increased attacks on the Taliban and al-Qaeda in their countries. The blowback has been increased suicide and truck bombings. The unintended consequence has been AQ leaving those countries and setting up shop in Yemen.

Lastly, these foreign policy issues are sucking the oxygen out of any Obama focus on health care and domestic issues. The Senate version is likely to carry the day over the House version, but there's major questions over whether it'll get to the finish line. Senate Democrats are wary of the "Ben Nelson" effecton their re-election. Nebraska polling data shows that he is behind 6% to 30% with his vote on health care. If he reverses his vote, his polling numbers improve to being down 47% to 37%. While Nelson doesn't have to run until 2012, the Democrats running in 2010 should be very nervous about this.

The President will have to make decisions on scanners, on potentially having someone take the fall at the CIA, on whether to back an Iranian opposition and on whether to back passing of a health care bill that is ugly political sausage.

Welcome back, hope you rested up.

Andrew B. Busch is Global Currency and Public Policy Strategist at BMO Capital Markets, a recognized expert on the world financial markets and how these markets are impacted by political events, and a frequent CNBC contributor. You can comment on his piece and

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