Whats up with these markets? What fundamentals have changed to lift these markets? Is it betting on “profits” US companies will be reaping from post-war Iraq rebuilding/oil prices?
No..that is a small reason. This spike is due to the removal of uncertainty about the war. Markets don;t like uncertainty. Expect it to go down in two weeks. Unless the arab sheiks take the money out of their mattresses and put them in American defence companies.
Maybe ... but more so it's about certainty and uncertainty! Investors are glad that some decision has been made on the war with Iraq & it's not in the limbo.
The day there was a hoax that Bin Laden is caught, markets jumped up for an hour or two ... until Pak officials denied it.
It is the removal of uncertainty. Each day that passes with no terrorist attacks, and the resolution to Iraq increases confidence in the future. The spector of a potential action has weighed on the American economy for the better part of 9 months.
In a multi trillion dollar economy the profits from rebuilding Iraq have a negligible effect. Price stability of oil helps, but that is probably counteracted by fears of higher deficits due to spending on the war.
Wall Street just wants resolution.