Ever wonder how lately it seems like as geopolitical tensions seem to worsen; the markets don’t seem to notice? Whether it’s terrorism, war or climate change, the world’s major challenges don’t seem to be making much of a dent in the U.S. economy. Have investors become complacent – or are the risks just not all that real for Wall Street? Stuart Schweitzer of JP Morgan Asset & Wealth Management, and David Dietze of Point View Financial Services shed some light on the issue on “Power Lunch” with Bill Griffeth.
It’s all about oil – that’s what Schweitzer says. Even though light sweet crude is ticking up today near $56 per barrel, oil prices are well off their lows and that’s why the market is shrugging off the global instability – particularly the tensions in the Middle East, Schweitzer says. He believes that behind the U.S. bull market, the global economy has been showing some signs of weakness. From an economic standpoint, that weakness could be advanced by oil prices if they continue to fall.
Dietze has a different outlook. He says investors are more attuned to “the ka-ching of the cash register than the din of the gunfire.” What he means -- revenues are what’s driving this economy, and even a costly and unpopular war can’t take the steam out from a market that is looking at its 14th straight quarter of double-digit earnings. So as long as stocks hold steady, Dietze says, don’t expect flaring global tensions to interrupt the market too much. Moreover, he believes, the outlook going forward, particularly in Iraq, is actually improving and is better than just 6 to 9 months ago – a position not exactly widely-held among analysts or politicians.