Steve,
Once the war starts, it will be over in the blink of an eye. No one expects real resistance from the Iraqis. At least in the oil fields which are the objective of this imperial aggression. Our military will happily surround the major metropolitan areas of Iraq and simply starve out the resistance. There would be way too much bad press and public outrage should we simply engage in a massacre. What we'll do is to secure and garrison the fields and then use the excuse of a nation in opposition to our occupation, er, liberation, as the justification to siphon off the profits from the oil for our own purposes. The markets will see through the charade of "liberation" and be cheered on at how well we did at stealing the oil without unnecessary bloodshed.
In 1991, once it became apparent that Saddam's army was crushed, the market sprang back like a coiled spring.
DOW INDUSTRIAL AVERAGE
August 1, 1990 (one day prior to Iraq's invasion) 2,809
October 8, 1990 (nadir of market, peak of fretting) 2,398
January 7, 1991 (approx. start of air war) 2,501
Februar 25, 1991 (successful end of main campaign) 2,909
table.finance.yahoo.com
I'd say the odds are 9:1 that we get a 20% up move in the Dow from here, once the war is deemed to be concluded.
Re: So what does everyone think the markets immediate reaction will be when Bush gives the order to attack. I think it will sell off severely
If history is to repeat itself, you will be proven wrong. Mr. Market knows the outcome of the war is a foregone conclusion. The start of the war will be viewed as a positive for the market.
-R. |
