WTC: The Day After

By Ike Iossif

President/C.I.O, Aegean Capital Group, Inc.  

Wednesday 9-11-01, 6:15pm PST

For the past year I have repeatedly warned in our daily, weekly and monthly reports of the potential dangers lurking ahead due to the continuous violence in the Middle East. On 4-6-2001 I wrote: 

"However,  we are increasingly worried about the escalating violence in the Middle East. Over the past few months we have repeatedly  stated -see daily updates- our deep concern over the situation. MAKE NO MISTAKE, the continuous violence -if goes unchecked,-will ultimately impact our financial markets, directly, or, indirectly. Investors must understand, that there is a war taking place in the Middle East, and in the eyes of many Arabs, we ARE already a part of it. It does not matter whether the escalating violence results in a wider conflict in the area, or, Islamic extremists bring the conflict to our shores, either way , we will still be drawn into it with grave consequences. The violence in the Middle East, is the biggest and wildest card of all. Investors beware!"   (see Weekly Update for 4-6-2001)

Now that the "un-imaginable" has happened, what's next? As far as the markets are concerned we need to keep in mind that going into this horrible event, they were already oversold -read "ChartReview Weekly"- and a bounce was to be expected. Given the severity of the situation, there is no doubt that there is going to be a well orchestrated effort to keep the markets afloat, at least for the near future. Look for aggressive cuts by the FED, optimistic talk by government officials, and indirect FED intervention -thru the purchasing of Index Futures- to keep the market from experiencing further losses. In all likelihood, these efforts will succeed in the short term. Thus, I believe after the market re- opens, it will probably head higher for a few days and even weeks. What develops after that, is anybody's guess because no-one knows what may happen militarily and politically. Going after the terrorists by attacking those "who harbor them" -as the President suggested- carries tremendous risks. Attacking Iraq, Iran, Afghanistan, Sudan, Yemen (just to name a few of those "harboring" the terrorists) amounts to starting war against the Arab world. The E.U. wants no part of it, and we can find ourselves in terrible situation. There is no doubt, that those who perpetrated this terrible crime MUST BE made to pay for it. However, starting a war against the Arab world is not the answer!