Two major current geopolitical situations have the potential to strongly affect the financial markets. These would be the ongoing U.S./China "trade wars", and increasing tensions between the U.S. and Iran.
Clearly, Wall Street is worried over the Trump administration's trade war with China, and this is likely suppressing a strong rally in equities at the moment. Because we are long now, we are hoping these worries will subside or that Mr.Trump will perhaps surprise everyone with a compromise (he is known for his unpredictable changes of mind). That said, increasing U.S./China tensions could easily turn the markets down into the possible "washout" I described in yesterday's blog. We need to be aware of this now and watch our stop loss points diligently.
Tensions in the Middle East are always a potential "wild card" factor affecting the price of crude oil. Last week 1,500 U.S. troops were sent to the Middle East, and the White House is blaming Iran for recent tanker bombings as well as a rocket attack in Iraq. We are anticipating a significant cycle low in crude oil anytime now (but preferably in mid-June) and then a significant rally into the summer. Needless to say, an exacerbation of tensions between the U.S.and Iran could be the trigger that kicks off this rally. We will be watching this situation carefully.