Actually, something is quite "fishy" with this "war". The markets always "knows". If that is the case, why are defense stocks so consistently under performing in the last few months? Are we sure that this conflict ends up with war? The crude market says "yes", but maybe the current high crude prices reflect Venezuela and the harsh winter. One would assume that if war was imminent, orders for munition would flow to the like of ATK, and orders for communication systems to LLL and insiders and many others connected with these companies would know and buy these stocks. But the whole sector has been making yearly lows. Could it be that Bush does not intend to actually go to war and the whole "build up" is just a very aggressive way of showing Saddam what could happen if he does not comply?
If that is the case, Saddam is not stupid and will comply only very very slowly (destroying missiles? How, dismantling but keeping the pieces or blowing them up? Two more weeks of "US attrition" before that is implemented, and the same with each other munition which might slowly be discovered by the UN. He may figure that if he can hold an attack at bay till about 4/15, he now has a six months window open to play with till 10/15 or so before anything serious will happen to him.
Assume that i the case, what will the market do? They can have few nice rallies reacting nicely to the not so bad economic background, but nothing really huge since the economy is still "muddling" through.
Anyone would like to guess if such a scenario has any "legs"?
In the last half an hour or so, got some DRIV at $9.99, RMBS at $15.07 and EXPE at $68.30. Still at 70% cash though.
Zeev
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