Around the globe, people are reacting to the news of the death of Osama bin Laden. For the markets, a muted impact: The dollar and bond prices rallied but are now essentially flat. Gold was falling but has stabilized. Oil is down more than one percent. Matt Nesto, Jeff Macke, Aaron Task and Henry Blodget gathered to discuss this story. The consensus: markets aside, the importance of this story is enormous -- for America's psyche, its relationships abroad, for the future of the Middle East itself. Some of their comments are below:
"America can project its strength all over the globe to wreak furious vengeance upon our enemies.
The markets, just like all but the most obtuse of entities, knew, assumed and priced America's superiority into any and all trading vehicles. Bin Laden's death, while cause for celebration, does not offer a clear trade. Any and all sides of a position can be taken with equal clarity of thought.
Oil should move higher because of increased unrest due to vengeance terror attacks. Oil should move lower because of a demonstration of the U.S.'s ability to control events in the Middle East. Either reaction makes sense, as is the case with defense contractors, precious metals and so on. When a trade has no edge, it's imprudent to trade the reaction at all.
An unbridled rally is not the "patriotic" reaction -- it's a reason to take some profits. U.S. stocks are up more than 8% year-to-date. The market owes us nothing more. If I take any actions this morning, it will be to take some profits in the blue chips dominating my portfolio.
When I take those profits, I'll pocket some of the gains. Then I'll go out, buy a nice bottle of something and toast the death of the most loathed human being on the planet. That seems the most logical, most American, reaction."
"The death of Osama bin Laden is obviously welcome news and an incredible victory for U.S. military and intelligence agencies, albeit a long time coming.
Economically speaking, bin Laden's death will be significant if it revives confidence in the government's ability to do something right. The spontaneous celebrations in New York, Washington and other cities shows the positive psychological impact an event like this can have on ordinary citizens. In an economy that's greatly influenced by sentiment, in both directions, any such boost shouldn't be underestimated -- similar to the good spirits generated by the "miracle" landing of US Airways Flight 1549 on the Hudson River in January 2009.
On the other hand, the fact that the dollar rallied on the news of bin Laden's death is a sign of "risk" trades being unwound. Traders are perhaps using the news as an opportunity to book profits after a big move, but there are also legitimate concerns about possible revenge attacks by bin Laden's followers and al-Qaeda sympathizers.
Bin Laden's death comes during a period of massive upheaval in the Arab world. To date, the "Jasmine Revolution" has been mostly nonviolent and has largely marginalized the fundamental Islamist elements aligned with al-Qaeda. The nature of bin Laden's death -- by the hand of U.S. special forces on Pakistani soil -- will only exacerbate tensions between the U.S. and Pakistan and provides an opportunity for fundamentalists to ratchet up the anti-American, anti-Israeli rhetoric.
Critically, Egypt has been cozying up to Hamas in recent weeks, another sign of the breakdown of the "old" diplomatic order in this most critical region."
"My first reaction to the news of bin Laden's death was a sense of being glad about it ... followed shortly thereafter by questions about what kind of person would get out of bed to go cheer and congregate some place as a result of this development.
By this morning, my reaction was more calculated and market-oriented as I went through the headlines. My first Tweets are below:
- "Take the weak $ trade over dead bin laden trade all day, all week"
- "10 yrs to find a big spending hi-profile outspoken terrorist with an entourage and dialysis machine is cause for calibration not celebration"
By the time I arrived in bustling Grand Central, I am loath to admit, my own personal "threat con" level was already elevated. So much for feeling safer. If anything, I feel the opposite.
Passing a TV, I heard a commentator say "it's the kind of development that will boost confidence and make banks want to lend." Really? No it won't. It changes nothing. Troops aren't coming home. Homeland Security watch levels will remain elevated, and millions of unemployed people will still be in need of a job.
To sum it up -- bin Laden is dead, but I don't feel happy. Or safer."