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Peter Atwater: What Socionomics Says About Sochi Olympics Terror Threat


With Russian markets now deeply oversold and at a significant low, the potential for some form of meaningful social unrest at the Olympic Games is exceptionally high.

There have been a number of media stories about the security and safety of the upcoming Sochi Olympics. Looking at those concerns as a socionomist, there is good reason to be worried.

In Moods and Markets, I included this chart, which shows a clear correlation between Middle East terrorism and the Egyptian stock market.

With Russian markets now deeply oversold and at a significant low, the potential for some form of meaningful social unrest and/or violence at the Olympic Games is exceptionally high. And the terrorism might not necessarily come from within Russia.

Here are two charts of the Ukrainian Exchange Index.

As can be seen from the chart on the left, Ukrainian confidence has plummeted over the past three years. And while it has risen from its April 2013 lows, as the chart on the right shows, it is still below the December 2013 levels when the first Ukrainian riots broke out. Even more, while they were admittedly Chechen, the Tsarnaev brothers committed the horrific Boston Marathon bombings precisely at the April 2013 Ukrainian market lows. Assuming that Chechen confidence parallels Ukrainian confidence, as the Tsarnaev brothers' action suggests, Chechen rebels are highly likely to try to interrupt the Games given weak social mood.

While I haven't been able to find a chart of Middle East markets for the 1972 Munich Olympics, the broad range of terrorism from the late 1960s to the early 1970s suggests very low social mood during that period was a factor in the violence at those Games.

Finally, the 1996 summer Olympic Games in Atlanta, too, suggest a very clear social mood linkage to violence. As the chart below shows, the July 27th bombing took place just days after a major bottom in the S&P 500 (INDEXSP:.INX) that year.

Needless to say, I hope and pray that the athletes, their families, the fans, and the media are all safe at the Sochi Games. Looking at the current social mood for the region, however, there is very real cause for concern.

Peter Atwater's groundbreaking book "Moods and Markets" is now available on Amazon and Barnes & Noble.

"Peter Atwater brilliantly provides a framework for understanding both the socioeconomic hubris that led to the great credit bubble of the past decade and the dark social-psychological hangover that has resulted from its collapse. In so doing, he offers an invaluable guide to what promises to be a very difficult and turbulent period ahead as we experience what he calls the 'me, here, and now' behavioral tendencies of the post-crash world." -Sherle R. Schwenninger, Director, Economic Growth Program, New America Foundation

Twitter: @Peter_Atwater
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