I thought it was a well-written and well-delivered speech. He said what needed to be said, and laid out the ground rules for U.S. involvement in the coming conflict. Congress is behind him, and need to be because this will be no "instant-gratification"/Gulf War 4-days-and-we're-done scenario. It's clear he'll spend what's needed to do the job (and that's the right thing to do, even if it beats the equity and bond markets to a pulp). Some things (ie, providing for the common defense) take priority to propping up the markets for their own sake..especially when they don't "want" to be propped. Again, the sooner people understand that what's good for the country isn't always what's good for the Dow, the better off we'll all be.
Interesting reactions...certainly received well here. Interesting that Asian markets were universally down, though, with the Nikkei, Hang Seng, Kospi and TSE all hitting 52 week lows (of course some of that was simply follow-on for the miserable day US equities had). European stocks (the exchanges that matter, DAX, FTSE and CAC) are all down over 2 percent each and at new 52 week lows as well. Perhaps it was a bit aggressive for their tastes (too which I say, too friggin' bad, we'll handle this one alone if need be). The overseas reaction IS important though, vis-a-vis the market, since they hold huge blocks of both US stocks and bonds.
I think the bond market won't like it because of concerns of increased military spending. It's clear we NEED to increase spending (indeed, this was one additional area neglected due to the Bubble) in defense hardware, spare parts, salaries, to mobilize reserves and to increase the size of the standing military.
Stocks? Hmmm, who knows, we're probably due for a bounce tomorrow to save poot sellers. News flow outside of the speech was less than bullish (the B2B contracted again, EMC warned, Palm is sucking wind, Australian banks appear to be in some trouble, etc, etc.). Maybe another bounce before the next round of warnings.
BTW, budget deficit for August alone was $65 billion...wonder what September will look like.
quote.bloomberg.com |
