Welcome to Thoughts on the market.

I'm Andrew Sheets, Chief Cross Asset Strategy

for Morgan Stanley.

Along with my colleagues providing a variety of perspectives,

I'll be talking about trends across the global investment landscape and how we put those

different ideas together.

It's Friday, January 10th at 2 p.m. in London.

The new decade got off with a jolt of geopolitical risk causing oil prices to jump,

volatility to rise, and markets to stumble. The unpredictability of such events

means that there are rarely a good reason to make a long-run investment decision,

but stepping back there are a few things for investors to keep in mind.

The first is if these risks can matter in the very short run.

My colleague Martin Rats, who leads our commodity strategy team at Morgan Stanley looked at six instances since

1990 where oil prices jumped in response to a spike in references to geopolitical risk.

Over the next month, global stocks fell by a full 5%. Credit spreads widened and volatility rose.

A second thing to keep in mind is how oil prices have been moving higher.

Recent events increased the risk of a near-term disruption in oil supply.

But this happened at a moment when the world is actually producing far more oil than it needs,

and the recent rise in oil prices will only further encourage this trend,

incentivizing more drilling to capture that bounty.

That means higher oil prices today, but lower, potentially much lower oil prices down the

road.

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