This weekend Iran took responsibility for shooting down a Ukrainian passenger plane, a development that will surely escalate the conflict within the region. This kind of incremental rise in tension is likely just the beginning. At some point, investors may start to get nervous resulting in a mass-exodus.
The other issue at hand is the trade war with China, which has been put on the back burner in light of the Iran conflict. But investors shouldn’t forget that the trade issues between the US and China are still unresolved, meaning there’s potential for two sides to reverse course in the year ahead. As Jim Rogers pointed out,
Historically, trade wars have always been a disaster. No one has ever won a trade war. Trade wars frequently, or often, have led to real wars. It makes sense, you start slapping someone in the face and you slap them again and you slap them again [they’re going to fight back]. I mean they have to.
With both of those major catalysts still hanging over the market, investors are likely to react erratically to perceived bad news. That could be dangerous in a market where everyone is looking for an excuse to take profits.
- Source, CCN
