While major European markets slumped as evidenced by 1 percent-plus falls in indices such as the DAX, CAC, and FTSE, American indices have hardly been affected. At the outbreak of these events, the DJIA futures indicated a massive -210 change, while gold rallied by five dollars. Yet, as I write, the Dow Jones and gold are virtually unchanged for the day. Certainly, much of this change of heart can be attributed to a "thank goodness it didn't happen here" mentality, which was all too prevalent before the message that terrorists can strike practically anytime, anywhere was brought home by September 11, 2001. This mentality has seemingly been adopted again. Brought on board Bloomberg's American edition were guests who suggested that markets have become inured to attacks, basking in the bravery of being out of range. Yet, I would be more circumspect in this regard if I were them.
Instead of implying that this was a minor blip on the American radar, it would've been better if they more thoroughly discussed the typical ramifications of these occurences. Will oil prices go higher because of additional geopolitical instability, or will they go lower because demand will weaken in the wake of the attacks? What will happen to transportation and tourism stocks? How will the prospects of the 2012 London Olympic Games be affected? Are markets worried about follow-on attacks in the United States? These are all topics that are more pertinent and timely to investors instead of portraying the attacks as isolated from America. It's a small world, after all.
Posted by Emmanuel |