Terror having a substantial lasting effect is probably not one of them.
Some impact right now makes sense but it seems like that is mostly in the currency market more so than anywhere else.
Terror is not new to the the market. The attack five years ago was new. We saw faster snap backs in Spain a few years ago and then the UK bus bombing. Fair enough that this seems cold but so far this is how that market has digested these things.
Should something worse happen we may see something more severe in the market but even that is not clear. One thing for sure is that this is nasty unpleasant business but it is something that the market has to live with and in hind sight something the market should have been living with from the 1993 Trade Center attack.
Stock futures have come off of their lows in the last few minutes. At this point we are pointed to start lower but it would be interesting if the day finished higher in the face today's news (the market was higher the day of the UK bus bombing too though so maybe not that interesting).
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4 comments:
Indeed, I have to agree - longer-term, terrorism (and I suspect most of the geo-political worries that ravage the market day to day) probably don't have a dramatic effect. Those who bought the market in Europe on 7th July when it sold off in the immediate aftermath of the bombs have been rewarded handsomely...
... although don't forget the three tube trains that were blown up that day as well as the bus. Most of those who died, died underground.
Sadly, those of us who live and work in the great cities of the west have to get used to the very small risk of being in the wrong place at the wrong time (and for Londoners, as many others, this is not new...) Most cope; at a macro level, things seem to bounce back to normal very, very quickly.
Today's airport warnings are a reminder of a threat that already exists, not a new development markets have to discount. No one should be surprised by this: earlier this week, British newspapers carried headlines that more attacks on the capital are inevitable. Of course, this is not really uncanny timing - such headlines are really rather frequent! So, short-term noise for traders - a bit of extra weakness on a day where Europe was always going to trade weakly (we closed on a high yesterday, before the New York afternoon "fade" Roger talked about...) - but surely there's nothing in this development to change your long-term investment plans, which (for users of this site) no doubt centre on properly diversified portfolios that can take the rough with smooth and survive the day-to-day gyrations.
Cheers,
Londoner
I agree terrorism does not have a long term effect; however, when the terror incidents occur frequently all over the world. I think there is a connection. I would even go as far to say the developed world (the west) is in a world war against the undeveloped world.
Since oil is such a important part of our daily life. I can certainly think of events which would have a long term effect on investment portfolios.
For a fairly sobering read, have a look at "The Risk of Nuclear Terrorism in the UK" - free on the rather good Oxford Research Group wesbite: http://www.oxfordresearchgroup.org.uk/home.htm
Something sure is in the wind right now though. According to the most recent news flash the USA is on condition "orange" and the governator of California has dispatched the national guard to all airports; effective immediately bottles of liquid are forbidden in carry-on luggage nationwide (sounds like a bioterror threat); Logan airport in Boston appears to be a hot zone, possibly because many flights from England where this threat originated are scheduled to land there.
I sympathize with those attempting to travel by air today; here at home my stops on a couple legacy airlines got completely blown through from the gap down this morning - I really should have set stop-limits on those guys.
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