Zeev's Turnips Patch-No Politics (ZEEV)

[mlsoft]

"pstuartb, I can easily see the case for Hussein going into exile and hope I am Long the market the day it happens! If that wouldn't fuel a rally I don't think anything can."
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extelecom...

I agree that the abdication or sudden demise of Saddam would bring about a sharp rally in the markets, but with two caveats. First, if the event is somewhat slow to develop and the market runs up in anticipation, the final rally would be very brief. Second, the rally would be tempered by what kind of regime moves in to take power.

We must also be aware that just as such a "best case" scenario can occur, so can a "worst case", where Saddam's troops actually decide to fight an urban warfare engagement which would be drawn out and bloody. Saddam could also test our resolve by using gas, chemical, biological, or perhaps some version of a nuclear weapon both on us and/or against the oil fields of Saudi Arabia and Kuwait, and/or against Israel. Anything that produced a long drawn out war with high casualties would be deadly to the markets.

Finally, no matter what kind of rally the market gets, it will be relatively short lived and then the bear will reassert itself as the street returns to the reality of looking at earnings and valuations. Iraq has not been the cause of the bear market and an end to the situation there will not end the bear.

Just my opinion, though.

mlsoft