Having been relegated to the history books, the Cold War between the West and the East appears to be heating up again. On one side, we have increasing tensions with China; U.S. politicians claim that China is a currency-manipulator and China has massively increased its spending in defense, which is threatening the security in that part of the world. If we look to the Middle East, tensions are now rising with Russia.
Market sentiment has always been wary of the Middle East in relation to oil prices, partly because of the level of supplies generated within that region, and partly because of the traffic routes for transporting oil around the world. Oil prices are extremely sensitive to any disruption to either supply or transportation routes, as the world is increasingly run on just-in-time deliveries. Any disruption will certainly cause massive spikes in oil prices and volatility in market sentiment.
The recent hostilities between Turkey and Syria are now putting U.S.-Russian relations in the spotlight. Essentially, America is supporting the Syrian rebels and looking to oust their leader, believing this will free the Syrian people of the tyrant. Russia has been a long-term supporter of Syria, and has continued to provide military weapons to suppress the uprising.
In a recent interview in German newspaper Der Spiegel, Vladimir Yukanin, who is a close confidant of Russian President Vladimir Putin, made some remarks that certainly will affect market sentiment. (Source: "Russia and the West are Drifting Apart," Der Spiegel, October 11, 2012.) Read More http://www.investmentcontrarians.com/inflation/is-the-cold-war-heating-up-and-how-would-it-affect-your-wallet/825/