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The Market That Didn’t Bark

Just as Sherlock Holmes attached significance to a dog that didn’t bark, the stock market is usually telling us something when it doesn’t over-react.

Most pundits expected the stock market would be down sharply on Monday morning following the Friday terrorist attacks in Paris.  However, by Sunday night, the futures market has actually turned slightly positive.

When the market opened on Monday morning, it started sinking, not badly but sinking.  About eleven o’clock, there were rumors that the French air attack on Syria had destroyed oil facilities, and the price of oil started rising.  This focused the market’s attention that reducing the oil glut would be good for most every economy.  Stocks began to soar.

So, why didn’t the stock market tank?  First, it would have been more likely to tank, if the terrorist attack had occurred on U.S. soil, instead of foreign soil.  Second, since the attack was on Friday, investors had a two-day weekend to adjust.  Third, and I hate to say it, we have become more sanguine about terrorism.  There have been attacks, and the economy labored on.  There will be more terrorist attacks, and the economy will continue to labor on.  The economic cost of terrorist attacks is not as great as the emotional costs.