The world equity markets did not react much to the downing of Malaysia Flight 17 in Ukraine, apparently hit by a missile. After a brief sell-off, most of the major indices were down less than 1%. It is worth remembering and recounting the events that could crater the markets, since several of them could happen within the span of a day, or less.

The larger issue in Ukraine is whether what has been a series of serious skirmishes could become an all-out civil war. It would not only further damage relationships between Russia and the West. Sanctions imposed on Russia could drive its economy into full-blown recession. An interruption of oil flow could push up crude prices. Worries about the military conflict tipping into areas beyond Ukraine would increase.

The events that could affect oil prices exist well outside Eastern Europe. Nigeria is the 10th largest nation in the world based on oil reserves. The government there is unstable, and a civil war could erupt between the northern and southern parts of the country. Another of the world’s largest oil producers, Venezuela is also in the midst of economic turmoil.

Of course, the movement of Israeli troops into Gaza has set off concern about stability in the Middle East. It is hard to imagine in the short term that oil supply from Saudi Arabia, Kuwait or the United Arab Emirates would change. However, it is not unimaginable a much larger conflict between Israel and its close by neighbors could flame quickly, and beyond most current expectations.

Well beyond all of these regional threats is the future of the U.S. economy. Among the signals of its direction are the corporate earnings to be released in the next few weeks. However, most of those that have been released so far have been reasonably strong. Larger signals, which include housing starts and retail sales, have been weak recently. Many economists believe gross domestic product for the year will not improve more than 2%. If the figure is very poor for the second quarter, that forecast may be optimistic.

At this point, it appears that the threats to market value outnumber reasons for equity values to rise.

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