We are providing a link to the third party's website solely as a convenience to you, because we believe that website may provide useful content. We do not control the content on the third-party website; we do not guarantee any claims made on it; nor do we endorse the website, its sponsor, or any of the content, policies, activities, products or services offered on the website or by any advertiser on the site. We disclaim any responsibility for the website’s performance or interaction with your computer, its security and privacy policies and practices, and any consequences that may result from visiting it. The link is not intended to create an offer to sell, or a solicitation of an offer to buy or hold, any securities.
Click the link above to continue or CANCEL
Commentaries & market updates.
A new spin on the same theme.
A new spin on the same theme.
The lunatics are indeed running the asylum as investors once again ignore
bad economic data anticipating not the beginning of the War with Iraq but its
conclusion.
The theory of the moment is that the war in Iraq, rather than any other economic
factors, is driving the market. As a result, yesterday’s worse than expected
decline in manufacturing, and today’s worse than expected decline in factory
orders, were both ignored as traders bid the market higher as the Third Infantry
Division closed in on Baghdad. (This, of course, completely ignores that fact
that the peace is likely to be far more expensive, problematic and uncertain
than the war itself).
However, those who were looking for a repeat of the 1991 Gulf war experience
were proven wrong. After the bombs dropped in 1991 the market took off and
never looked back. This time, after a brief rally, the market quickly traded
below its pre-invasion level. Proving that hope really does spring eternal,
the Wall Street “perma-bulls” have re-written their rally scripts
to predict a victory rally rather than an invasion rally. Such Pollyanna outlooks
will once again be proven wrong, as America’s severe underlying economic problems
will persist regardless of which regime rules Iraq.
Friday’s release of the March employment data will mostly likely also come
in weaker than anticipated, particularly in the manufacturing sector, as the
American industrial base (in what may be characterized as the world’s largest
banana republic) continues to disintegrate. As we have already rallied quite
a bit in the last two sessions, it seems unlikely that the advance will continue
in the face of even more bad economic data.
Sign up for our Free Reports & Market Updates.