The more I look at the market, the more confused I become. In the recent past we've had saber rattling the US, England and Baghdad. Almost everyone is talking about when the US and UK will attack Iraq. Not if. On top of that we have the whole explosive North Korean situation. And it seems to be escalating each week. But when I look at the market I get a totally different picture. For example, the $XOI (Oil Index) is drooping, well off its highs reached in early 2002. The $OSX (Oil Services) is almost as flacid, meandering in a mazy motion, mainly downward. As well, $DFX (Defense Sector) is drooping and deflated. If the market knows before anyone (according to Dow theory) and discounts the future, then why are the sectors that would benefit from the war not rallying? We've all heard those that say this is all about American imperialism and the true goal is getting their hands on Iraqi oil fields. I don't want to get into a political debate about this. My point in bringing that up is to say, ok....so if that is the real aim of the US and if they are without a doubt going to invade, take over and occupy Iraq.... ....then why are the sectors of the US economy that would benefit tremendously from such events not responding? My personal take on things is this: there will be no war. I know that sounds kooky, but that (to me) is what the market is whispering. I would really like to know what other traders read into the market action, but I beseech you to please contain your comments to the market and strategy instead of political debate. I initiated this thread in the 'Trading' forum because I wished it to be about the market and not about politics. Look forward to your ideas.
There will be no war, either a coup or exile in France. Regarding N. Korea, the situation is not explosive just a simple case of blackmail by the N. Koreans which they've done in the past, no big deal really.
Babak, You put my haunting thoughts into words. Your point on the logical sectors slumping is right on. I keep getting the feeling and am beginning to see small signs of perhaps Saddam going into exile or being removed without war. It also seems that there is almost too much war rhetoric going on maybe trying to get him to leave under the tremendous threat of his destruction. Whether it is the lull before the storm or the market whispering we'll just have to wait and see. If all the war talk and threats do in fact cause his removal then it was well worth the effort.
Yes, there will be an invasion of Iraq. Wanna bet, babak? I'll bet $10,000. Well you don't have that, so I'll bet you $100. The only thing the markets whispering to you is that it will open for trading tomorrow and the day after. It's not giving you easy money. Most likely, you've already deposited enough with Wall St. anyway. People like yourself try to convince yourselves "no war". You are in for a rude awakening the end of January when we invade and conquer. Vinny
It looks like the market has already discounted a quick victory over Iraq. To the degree the North Korean situation generates capital outflows from the region, it helps the market.
Could very well be the case. Sadaam could leave or be forced out. You have to look at all the angles. Good post.
You may be right, but they may also be looking at the effects of a war and deciding that they will be minimal. Remember when we all awoke to the Russian "coup" and the market dropped through a manhole? Then everybody realized that a coup would have no appreciable effect on our economy, and the market came straight back up. The pros may feel that Iraq is irrelevant. --Db
For a long time I have been certain there will be a war. But as others have pointed out there may be a coup or Saddam will go into exile somewhere. That still doesn't mean there wont be a war. If Saddam leaves, who will take over? Maybe one of his sons. Net change= zero. So perhaps the invasion has been moved further into the future and the market is reacting to a short to medium term breathing spell. North Korea is a non-event. I think China and Russia will put the pressure on in that arena. They don't want those idiots on their doorstep with nukes.