The threat of a new U.S.-EU-led intervention in the Middle East intensified in the past week and a half, following a devastating chemical attack that left at least hundreds dead and thousands more wounded. In response, the U.S. government, along with several European allies, is considering military action against what they believe was the use of weapons of mass destruction against a civilian population.
The fear of regional war – and the economic implications of such an event – are well-known to investors. Anxieties over heightened energy prices, a lockdown in global trade and even an uptick in terrorist activity worldwide are just a few problems on the list of potential consequences of a Syrian invasion. Many market participants are watching the Obama White House for any signs that the 21st century is going to enter a dangerous and unknown period.
Oil prices have already begun to jump in light of the potential war. According to Oil-Price.net, the Brent crude price surpassed $111, although by late afternoon it had settled back to $110. WTI Crude Oil tapered slightly to $105. As oil prices are an important indicator on economic growth – oil being a crucial natural resource – the global economy could take some damage from a Syrian invasion.
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Categories: Risk Management, Trading & Portfolio Strategies