"I wouldn't be surprised if the rally lasted only about an hour."
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Frank...
Just trying to catch up on the posts here, and yours caught my eye as most closely representing how I am thinking. Leave Iraq totally out of it and nothing that has taken the market down has changed. Earnings are still in the tank (and still just as fictitious) and getting worse, as we are already seeing in the very early stages of warnings season. The economy is still slowing. Valuations are still very high, even using the fictitious earnings. Uncertainties abound, be they terrorism, an overvalued dollar with a record high current accounts deficit, falling world economies, the potential for economic collapse in South America and Japan, and several possibilities for domestic economic dislocation.
So what did Saddam's missive this afternoon do to alleviate all of that?? Nothing. While I would not rule out an eventual "deal" to let him leave Iraq alive and give us a bloodless ending to it all, this is not it. Today's little charade is just one more in a long list of delaying tactics designed to make the UN Circus dance a while longer to give him more time and to attempt to prevent any coalition from being put together. I am quite sure it will be (properly) rejected out of hand by the President, and Saddam will be presented with a "no negotiating" ultimatum from either the UN or the US and a few allies.
I think the market is smart enough to know this is merely a ploy by Saddam, and it will not likely change either the outcome or the timing of the eventual showdown.
I think this will be a very short rally - somewhere between your one hour and Zeev's day and a half. My best guess is that we will be fading by tomorrow afternoon, much to the "shock" of the talking heads on TV.
mlsoft
*** in the meantime, I have some preparation "H" for in the morning, and will be looking to add to short positions.
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