Tags: russia | terrorism | oil | war

Russian Plane Terrorism Is Bullish for Oil as Drumbeat of War Grows Louder

Russian Plane Terrorism Is Bullish for Oil as Drumbeat of War Grows Louder
(Alaa El Kassas/Anadolu Agency/Getty Images)

By    |   Friday, 06 November 2015 07:48 AM

Planes don’t normally break up in flight. When they do, it’s most likely either a catastrophic maintenance failure or an explosion caused by an “external factor.” As we have learned in the past few years, an external factor is either an antiaircraft missile or a bomb smuggled on board the aircraft.

The Russian airliner that crashed last week was most likely a terrorist attack brought down by a bomb onboard the aircraft.

Reports indicate U.S. satellites picked up a flash from the aircraft. Satellites are designed to detect large heat sources like rocket engines launching a nuclear missile. A bomb under a seat could be enough to destroy the aircraft but is unlikely to create enough heat to attract the attention of a satellite.

The bomb would need to destroy the fuel tanks to create that much heat. In this case, the bomb would have exploded shortly after takeoff, when the tanks were filled for a nine-hour flight. That much fuel exploding could be caught on satellite.

What does this have to do with the markets?

In all likelihood, Russia will deploy additional forces to counter the terrorist threat and this could affect markets around the world.

This should be bullish for oil which will be needed to fuel military operations. Treasurys and the U.S. dollar should benefit from a flight to safety trade.

For stocks, increased conflict in the Middle East could be bearish.

Stock market investors cannot continue to ignore mounting bad news. The world is exploding in conflict while global economies slow.

Until a full-scale war effort is launched, stocks could track the path they took in the 1930s.

When the U.S. takes a leadership role in the world again, we should see a bull market resume.

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MichaelCarr
Stock market investors cannot continue to ignore mounting bad news. The world is exploding in conflict while global economies slow.
russia, terrorism, oil, war
290
2015-48-06
Friday, 06 November 2015 07:48 AM
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