Heightened geopolitical risk has become the new normal in our brave new world, one of the driving forces behind financial market volatility and sentiment. Paul Tudor Jones was on CNBC and is predicting a bleak future for the economy and stocks heading into 2024.
One of the concerns highlighted by the famed billionaire money manager is the emerging conflict in Israel which should not be a surprise to anyone, something that he can’t take nuclear war off the table around as escalation potential is unknown at the moment.
Elsewhere, we also have a war still going on in Ukraine with Russia, the country with the largest nuclear arsenal in the world, that has now gone on for more than a year. Then, there is always the potential of China invading Taiwan, a concern that has been lingering for years now.
A fund manager told me that in the event the war in the Middle East does broaden to significantly disrupt the flow of oil, oil could go to as high as USD150 a barrel from here. In another report which landed in my inbox, International Monetary Fund warned that the world economy has lost momentum from the impact of higher interest rates, the invasion of Ukraine and widening geopolitical rifts, and it now faces new uncertainty from the new conflict in the Middle East.
There is obviously a lot at stake here. The conflict has taken an considerable human toll, and we see no sign that fighting will end soon. I know that there are some people who know very little about the Israel-Palestine conflict if they know anything at all. Market corrections or volatility always feel painful even for long-term investors. However, they are also very common. I will skip the details which will need a lot of my sweat and tears.