Tags: Ron Insana | cnbc | Hot Spots | Stocks

Ron Insana: These Global Hot Spots Could Sink Stocks

Ron Insana: These Global Hot Spots Could Sink Stocks
(Dollar Photo Club)

By    |   Wednesday, 04 November 2015 08:10 AM

Ron Insana, a CNBC and MSNBC contributor and the author of four books on Wall Street, warns that numerous global hot spots could sink stocks.

"Financial markets around the world have been preoccupied with both economic and monetary policy uncertainties. But in the last few days, it has become apparent that the real risks of an unexpected market event can be found in military theaters around the world," he wrote for CNBC.com.

"The threat of an accidental encounter between either U.S or Russian air forces in the Middle East, or U.S. and Chinese naval forces in the South China Sea, are growing greater every day," he wrote.

"And, it's not the only global hot spot in play. U.S. warships are now powering through the South China Sea, testing China's willingness to allow unfettered passage for any ships sailing in recognized shipping lanes around the world," he wrote.

Insana is hardly the only prominent economic expert to warn about global volatility.

Newsmax Finance Insider Mohamed El-Erian warns that holding a good chunk of cash in your investment portfolio is a shrew strategy considering the global current volatility.

"A good cushion of cash and cash equivalents in portfolios makes sense for both strategic and tactical reasons," he writes for the FT.com.

“As we were reminded on several occasions this year, this is a market in which fundamentally solid stocks and bonds can easily get unduly contaminated by weaknesses elsewhere, especially given the high likelihood of patchy liquidity.”

Paul Singer, the billionaire founder of $27 billion hedge fund firm Elliott Management, said stock and bond markets are structurally “unsound” as evidenced in recent market volatility, Bloomberg reported.

In a wide-ranging letter that warned of the effects from low interest rates, unrest in the Middle East, and leverage in the financial system, Singer, 71, said steep declines and rapid recoveries in financial markets, such as the Aug. 24 stock market slump, and recent flash crashes in bond markets, probably foreshadow the future.

“All of the innovations and complexity in the modern world of finance combine in different ingredients at different times with different catalysts to create fragility, not stability,” he wrote in a note to clients dated Oct. 27.

“We wonder if the overall impact of financial innovation, including derivatives, structured products, high frequency trading and communication advances, is net negative, albeit with a possibly long delay before the drawbacks become visible.”

(Newsmax wire services contributed to this report).

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Ron Insana, a CNBC and MSNBC contributor and the author of four books on Wall Street, warns that numerous global hot spots could sink stocks.
Ron Insana, cnbc, Hot Spots, Stocks
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2015-10-04
Wednesday, 04 November 2015 08:10 AM
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