Nailing down a nuclear treaty could be what finally stabilizes the relationship between Russia and the United States, but how exactly will it affect Russian exchange traded funds (ETFs)?
There was a time when Russian GDP was measured in the number of hours that the volatile country could keep the United States at the nuclear negotiating table. The good thing is that both nations are signaling something of a truce.
Russia has withdrawn a threat made by its president to supply nuclear-capable missiles in Kaliningrad to target Poland and Czechoslovakia and has halted its plans to sell its longer-range anti-aircraft missiles to Iran. As for the United States, President Barack Obama is willing to ratify the Comprehensive Test-Ban Treaty, states The Economist.
Additionally, both countries agree on cutting weapons numbers, which may smooth the path to agreement on boosting the battered Nuclear Non-Proliferation Treaty. The negative side of slashing weapons numbers by huge numbers is that it would require a lot more transparency from Russia’s defense ministry and arms factories. It also might awaken a sleeper of smaller arsenals in China, France, Britain, India, Pakistan and Israel. Lastly, we must keep in mind protecting ourselves from global terrorism.
Reaching a nuclear arms treaty will be tedious, but can be done. Not only will this make most of us sleep better at night, but it will stabilize and lower the volatility of Russia making the emerging market a more desirable place to invest.
- Market Vectors Russia (RSX) is up 3.1% year to date and has crossed its 50-day moving average
Kevin Grewal contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.