If Faisal Shahzad had blown up his Pathfinder on Saturday night in Times Square, do you think it would have affected the stock market on Monday morning? I ask that not because I’m some heartless markets guy who sees the world only as it affects equities; I walk right past where Shahzad dumped his SUV twice a day, every day. Our office is two blocks away.
I ask because pondering it is like one of those Zen koans the monks meditate on, in this case a koan that illuminates where the market’s head is these days.
Let’s assume Shahzad did his job well. He killed, say, a dozen people coming out of the theater and wounded two dozen more, on a Saturday night in Times Square, one of the most famous, recognizable places in America. In the initial panic, he gets away. Sunday morning, blood-splattered images fill TVs across the country, across the world. How did this happen? Who did it? Will they do it again? Remember, a terrorist’s main goal is to instill terror. In our scenario, Shahzad did his job well.
How does the market react? Monday morning, the papers are starting to wonder, are we losing the war on terrorism? Homegrown or foreign, does it matter? Does the Obama administration have the gumption to really take on the terrorists, wherever and whoever they are? What are we really doing in Iraq and Afghanistan? Think the market is shocked by all this? Think that V-shaped confidence cracks a bit?