Don Coxe on North Korea and Geopolitical 'Earthquakes' Taking Shape

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Don Coxe, Chairman of Coxe Advisors, tells Financial Sense Newshour that the greatest threats facing market stability are geopolitical in nature and many investors are failing to recognize the gravity of today's events.

For related podcast, see Don Coxe on What the Market Does Not Know.

Dysfunction in the West

From political upheaval and polarization in American politics to recent turmoil in European governments, we’re seeing a wide range of geopolitical forces come to bear on the future of markets right now.

The last time Germany experienced a political environment similar to what it’s seeing now was 85 years ago, Coxe said, when Paul Hindenburg beat out Adolf Hitler for the office of President. He was eventually forced to appoint Hitler Chancellor of Germany only a year later.

“What’s interesting is, the stability that Germany has provided in the post-war period to Europe – now that’s being challenged,” Coxe said.

“Those people that spend their time looking at just the stock market, the bond market, and the economic numbers may be missing the fact that underneath, there’s potential for earthquakes of a grand nature that could bring down large buildings,” Coxe said.

Polarization Is Rampant

Polarization is happening almost everywhere, Coxe noted.

Radical politics have developed on both sides in the United States, and Britain is also having problems with the potential for its government to fall apart.

The polarization we’re seeing isn’t a result of arguments about politics, however. Instead, they’re stemming from issues over political correctness, Coxe stated.

“What we have is, peoples’ deep feelings about what is right and wrong, and that there’s nothing in between,” he said. “We don’t have discussions and trade-offs and deals and so forth, and this is on a scale I haven’t seen.”

“Investors should not assume that everything will eventually be worked out,” he said.

Drivers Going Forward

There are a few key issues Coxe believes will influence markets going forward … and how bad things could get.

The most pressing concern centers on how we resolve the North Korean situation so that the US-China trade relationship can be dealt with on a more businesslike basis.

Political instability in Europe also needs to be addressed, he added. While armed conflict is a possible outcome — as Europe was at the heart of many conflagrations in the Twentieth Century — there’s more to be concerned about when it comes to the Continent’s politics, Coxe noted.

Global geopolitics and political dysfunction in general could create challenges nobody has been preparing for, because they have no precedent for it, Coxe warned.

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