Sense on Cents

As if we do not have enough issues to deal with here in our own backyard, we are reminded on Memorial Day, of all days, just how mad and unsettling the state of our world happens to be. I broached this theme on April 5th, but recent international events make it prudent to revisit.

While the issues in North Korea and the Middle East deal primarily with military and political conflicts, they most definitely impact our financial markets. How so? Any time we are faced with increased risks of any sort, the markets incorporate them into prices. 

Going to the Far East, we encounter Kim Jong Il of North Korea detonating a nuclear bomb. As reported by CNN,  World Outraged by North Korea’s Latest Nuke Test.  How will Obama and world leaders respond? A bully left unchecked will continue to try to move his sphere of influence:  

“North Korea is directly and recklessly challenging the international community,” the White House said. “The danger posed by North Korea’s threatening activities warrants action by the international community.”

While the test was not a surprise, Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, said it showed Pyongyang was becoming “increasingly belligerent.”

Moving into the Middle East, we encounter a cauldron continuing to boil. Reuters reports, Iran Sends Warships to Gulf of Aden:

Iran has sent six warships to international waters, including the Gulf of Aden, to show its ability to confront any foreign threats, its naval commander said on Monday.

Admiral Habibollah Sayyari, quoted by the ISNA news agency, made the announcement five days after Iran said it test-fired a surface-to-surface missile with a range of 2,000 km (1,200 miles), putting Israel and U.S. bases in the area within reach. 

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