Geopolitical risk just escalated dramatically - and the American public seems to still be mainly concerned about the lack of decorations on their Starbucks cups.

The Turks shot down a Russian SU-24 Fighter this morning. Think this will improve Russia-Turkish relations? 

The US-sponsored rebels in Northern Syria shot down a Russian Search and Rescue helicopter using a US-provided missile, murdered the crew as they parachuted to the ground, and kindly provided video of the shoot-down. 

Al-Qaeda (Nusra) kindly provided a video showing they are using US-provided TOW missiles. 

The US warned the oil tanker drivers that they were going to attack their trucks, 45 minutes before the attack. The US proudly stated they destroyed 156 trucks. The Russians claimed to have destroyed 1,000 (even if they only destroyed 500, it seems the US is being pretty hesitant to seriously harm ISIS). Why?

No one has yet identified the oil trading company that is helping ISIS - yet the authorities in Europe and the US must know who it is that is buying this much oil... it just can't be that hard to find out. 3 
This is dangerous and feels... like the West is playing a really scary game, while a lot of people die.

the West is playing a really scary game, while a lot of people die.

 

Eoin Treacy's view

Thank you for this summary of some of the main news items making headlines in the unfolding story of how a considerable number of countries are supporting competing factions,  ethnic and religious groups within Syria. Quite apart from the USA and Russia’s activities within the region, Turkey, Iraq, Saudi Arabia, Iran as well as a host of different tribes all have a vested interest in how the political situation in Syria is eventually resolved. Despite the fact John Kerry was quoted only last week as saying a ceasefire could be only a few weeks away, that now has to be questioned. 

This is a volatile environment geopolitically but Syria is not a major oil producing nation so the wider economic impact of today’s news items is unlikely to have a major effect. It has helped oil prices to find near-term support in the region of their May lows and is likely to act as a catalyst for short-term overbought conditions on stock markets to be consolidated. A further deterioration in relations between NATO and Russia would probably be required to more deeply affect markets. Even then we have to consider what effect such an outcome would have on monetary policy which suggests the threat would need to be grave indeed for a meaningful response from investors.