I think it's more brinksmanship than a bluff. President has now put the credibility of the US on the line, and will have to invade if appropriate concession is not made (whether Bush should have done this in the first place is a whole other debate). But at this point, that's where we are. But I do suspect that this may be brinksmanship, to force Iraq into appropriate inspections and disarmerment well beyond the games he was playing in 1998. As far as how the market will react, I have no clue, no clue whatsover, other than it will do what it takes to fool the most people.
Of course man! They keep saying he's on the verge of developing nukes.... Come on! He probably has had them for the last ten or fifteen years! What is there to develop??? The wheel has been invented a long time ago. He has bought either the nukes all assembled, or paid someone for the skills a LOOOONG time ago. The only thing he might still be missing are the long range delivery systems. The sad fact is that nowadays I don't think there is a single country that can't get ahold of nukes if they really want them. It doesn't take that much $$$ to buy them from India or Pakistan or China or Russia. If Bush is to launch an attack on them for that, he might as well attack about 10 more countries that are potentially hostile and most likely already have the nukes.
It will be "interesting" to see if any new information comes out in the next week. I imagine there may be some things that we don't know about yet. We should only prosecute Sodom if it can be shown that he is a clearly imminent danger to us, or ther innocents (like Kuwait, who were attacked without provocation, or Israel, who were attacked with rockets without provocation, or Saudi Arabia, etc.).
I don't understand why we need to be in imminent danger to go into Iraq. Maybe we are and maybe we are not but I don't think it is relevant. The U.S. and several other countries liberated Kuwait and defeated Iraq. We (the victorious parties) have the right to dictate to Iraq terms that it must live up to. We have done that through the UN. Iraq hasn't lived up to the terms (the inspection regime), and has a pattern of not living up to this regime - this is clearly established. Now we are saying he gets a clean slate and has to be bad again before we can do anything? It makes no sense. We have a right (as one of the victorious parties) to enforce the terms that the UN has set forth, namely that Iraq must allow inspections, and destroy all weapons of mass destruction.