Weekend Tidbit

If my years in the financial markets have taught me anything, it's the fact that you've got to keep abreast of a wide range of news rather than the business-specific stories.  Geopolitical events are of particular importance as they can inject a healthy dose of panic into the markets.  With that in mind, I believe that there is a need to keep an eye on the rhetoric coming out of North Korea.  Despite the fact that Pyongyang is well known for its use of provocative commentary (usually as a means to extort economic aid from the U.S. and others), it appears that the country's latest comments are climbing to new heights with the onset of the joint military exercises between the U.S. and South Korea.  These exercises are specifically designed to demonstrate the strength of the U.S.-South Korean relationship (especially in light of the tepid response from Washington regarding the sinking of the Cheonan) directly to the North Koreans.  While a necessary show of force from the South Korean perspective (and to a lesser extent for the U.S. as well), tensions will no doubt be ratcheted up in the region for the foreseeable future.  As investors, we need to be aware of these events and their possible effects on asset prices.  My read is that Asia will likely see some pressure early this coming week as diplomatic efforts attempt to quash the concerns arising from the recent commentary.  More than anything, I bring this issue up as something that needs to be carefully monitored.  A more defensive posture to the Asian markets might be warranted in the near term, but, for now, there is nothing that warrants any kind of capital flight.

As an aside, I look to Strategic Forecasting (STRATFOR) for much of the information I need to fully grasp the potential impacts of these types of geopolitical events.  I would encourage each of you to check them out as their work is top-notch.  While largely a fee-based site, there are free reports that you can sign up for that are both timely and insightful.  Enjoy the rest of your weekend!