Money and Markets: Investing Insights

Is “Lone Wolf” Terrorism Now the Biggest Security Threat?

Mike Larson | Monday, September 19, 2016 at 4:30 pm

Market Roundup Dow 18,120.17 (-3.63) S&P 2,139.12 (-0.04) NASDAQ 5,235.03 (-9.54) 10-YR Yield 1.70% (-0.01) Gold $1,312.40 (+$6.20) Oil $43.79 (+$0.17)

The worst terrorist attacks are those you can’t foresee and can’t do much to prevent. That’s why the events of the past 48 hours are so concerning. On Saturday night, a bomb exploded in New York’s Chelsea neighborhood. No one was killed, fortunately, but 29 people were injured.
It appears a pressure cooker packed with shrapnel and explosives was used in the attack, just like with the 2013 Boston Marathon bombing. A second device was found a few blocks away before it could go off.

Also on Saturday night, a man stabbed several shoppers in a St. Cloud, Minnesota, shopping mall called the Crossroads Center. He ultimately managed to injure (but not kill) nine people before being shot dead by an off-duty police officer. Investigators identified a Somali-American man named Dahir Adan as the attacker, and ISIS claimed responsibility for his actions.
Meanwhile, a bomb went off Saturday morning in Seaside Park, New Jersey. The device was apparently targeting a charity race, but no one was hurt because the start had been delayed by logistical issues.
Finally, a backpack full of pipe bombs was discovered in Elizabeth, New Jersey, not far from a train station last night. Five devices were found, one of which detonated when experts attempted to diffuse them.
Police announced earlier today that they were seeking a 28-year-old man named Ahmad Khan Rahami as part of the investigation into the incidents. He is a U.S. citizen who originally came here from Afghanistan. Rahami was later caught after a shootout with police in New Jersey.
Only time will tell if Rahami is guilty and if so, what his precise motives were. But the attacks are just the latest in a string of troubling incidents here and abroad.

Lone wolves don’t require the large infrastructure, financing, and communications work that 9/11 did.

They don’t require the large infrastructure, financing, and communications work that 9/11 did. The perpetrators don’t have to be trained, sophisticated experts – just “lone wolves” who can be recruited through the Internet. And the targets aren’t the kind of hardened sites that are difficult to strike. That makes these attacks very hard to prevent.
Our own Jeff Cantor has written about ways to protect yourself, and I recommend you check out his work here. The research group Stratfor has also suggested things you can do. Plus, the Department of Homeland Security promotes a policy called “If You See Something, Say Something.”
But the reality is, the terrorism threat isn’t going away – not here, and not overseas. It’s just one more thing we have to factor in to our daily lives, not just as investors but as Americans (or citizens of other threatened nations).
With that said, what do you think of the latest attacks in New York and New Jersey? Is there anything law enforcement or intelligence agencies could have done to prevent them? What can we do in our daily lives to reduce our vulnerability? Any and all suggestions are welcome, so please pass them along in the comment section below.

Our Readers Speak

Shifting back to the markets, we’re clearly seeing more near-term volatility. But what does that mean for the rest of 2016 and beyond? Are stocks finding their footing again, or just pausing before a substantial fall?
Reader Chuck B. said he’s not yet sold on the idea of an imminent plunge: “A market collapse isn’t likely to happen suddenly and surprisingly. It will probably begin with various-sized drops and partial or complete recoveries. Then, perhaps after a ‘black swan’ event of some sort, the big drops will begin – one after another – until the bottom area is reached. The details remain unclear.”
But Reader Anthony G. warned that a sharp drop could surprise unprepared investors: “The artificial growth can evaporate overnight. The billionaires are right on target. The central bank shortcut will lead to disaster.”
Reader Hapuna also sounded a cautious note: “Anyone with a way to connect to the Internet knows that a storm is brewing. It is not just the investment world that is close to blowing. It is the political scene and the entire financial spectrum. There is almost no wiggle room left.
“Soon the crash will occur and with it fortunes will be lost and a few gained. I am on the short side right now. Plus, I am holding a larger proportion of cash and equivalents. The everything bubble is actively searching for a pin.”
On the other hand, Reader David C. suggested taking the other side of that trade could pay off: “Is there anyone out there who isn’t ‘really worried’ about something, which means they have probably sold? And aren’t some of these guys hugely short the market, too? Is it possible they are ‘talking their book?’ I am not buying but I have sold puts on stocks I like.”
Finally, Reader Glenn said he still sees opportunity north of the border: “Glad to hear you’re in Toronto (where I live). I hope you get the opportunity to spend some time investigating the TSX. I believe there are some great opportunities here in Canada.
“Our banking system is very secure, the stocks offer great dividends, and they have shown solid growth this year. Yes, our natural resources stocks have been hit hard due to low oil prices. But there could be buying opportunities. Don’t forget the gold stocks here as well.”
Thanks for taking the time to weigh in. Markets are swinging sharply from one day to the next while investors try to figure out where interest rates are headed next. Depending on what the Federal Reserve and Bank of Japan announce later this week, we could see some real fireworks. Stay tuned, and be sure to add your opinions online if you haven’t done so yet.

Other Developments of the Day

OPEC is having a tough time building consensus for a price-supporting production cut. A key obstacle: Countries like Libya, Nigeria, and Iran want to boost their output in the wake of regional fighting and sanctions. Other OPEC members like Saudi Arabia don’t want to turn their own taps off because that would cause them to lose market share.
Two days before the Federal Reserve’s next policy decision, the Wall Street Journal covered Boston Fed President Eric Rosengren’s concerns about a commercial real estate bubble – and suggested those concerns could influence any rate decision. The article is worth a read if you have a minute, as it covers some of the same ground I’ve covered here in Money and Markets.
Does a Chinese debt-pocalypse loom? That’s what the Bank for International Settlements (BIS) seems to be concerned about.
The Swiss advisory group to world central banks said China’s government and private sector have borrowed so much money that the nation’s outstanding debt now totals 255% of GDP. Moreover, a BIS measure of how quickly debt is piling up is now at three times the level considered to be high risk.
Will OPEC ever be able to get its members lined up behind a production cut? Or are they going to fail, sending prices lower? What do you think about the WSJ‘s coverage of a potential commercial real estate crisis? Any thoughts on China’s debt issues? I’d love to hear from you about these matters in the comment section below.
Until next time,
Mike Larson

Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.