Posts filed under “War/Defense”

Market Adapting to Ugly Realities

We said last week we expect the market will behave much better once the Fed finally gets past the first rate hike. But at the risk of being too cheery, there are other factors impacting the markets, of a decidedly less joyful variety.

Not Oil, Not Interest Rates: We believe rising interest rates and crude prices are “baked in” the market. I would posit that “other uglies” are now impacting investors. These gyrations are a reflection of the collective mindset adapting to newer and unpleasant realities:

The Iraq War is a Mess: The situation in the mid-east has been getting worse since the uprising in Fallujah. A WSJ poll last week found over 60% of respondents believe the situation in Iraq is slipping out of control. That was before the prisoner abuse/torture scandal erupted. Its likely to get worse. Defense Secretary Donald Rumsfeld, in testimony last week, put Senators on notice that additional recordings showing rape and severe beatings are in his possession.

The Incumbent is Vulnerable: The Iraq situation is a vulnerability for President Bush. Barron’s big money poll revealed the vast majority of fund managers – nearly 80% – want to see the incumbent re-elected. The history of presidential elections shows that the markets have a distinct preference for incumbents over challengers, especially in the period leading up to elections.

Backlash May Hurt U.S. Companies’ Sales: Many large U.S. multinationals derive over half of their revenues from overseas. Any damage to the U.S. reputation can negatively impact sales, recruitment, strategic partnerships, etc. Remember, merely because “Old Europe” didn’t vote our way in the U.N., some quarters in the U.S. had called for a boycott of all things French. How might the world respond to more disturbing images of torture and abuse?

Greenspan Warns on Deficits, Taxes: Regardless of who wins in November, your taxes are likely going higher. In a speech last week, the Chairman reversed gears (yet again) and has returned to being a deficit hawk. I suspect he is warning the markets of eventual tax hikes.

The technical damage is happening: Support lines have been breeched, including the major indexes are now below March’s lows. In our opinion, that’s an ominous signal, which bodes poorly for the immediate future. We will continue to look for signs of extremes, which suggest an oversold market, which can be bought. We are not quite there yet – but the week is still young.

Category: Finance, Politics, War/Defense

Do the the Medals matter ?

Category: Politics, War/Defense

Determining the Outcome of the 2004 Election, part II

Category: Finance, Politics, War/Defense

2002 PBS interview: Richard Clarke

Category: Politics, War/Defense

Can radical Islam can win?

Category: Current Affairs, Politics, War/Defense

Terror, Technicals and the TRIN

Category: Finance, War/Defense

It’s not whether the Medals matter or not

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Today’s New York Times has an OpEd titled “The Medals Don’t Matter.” It’s by Jake Tapper, who is a well regarded ABC News Correspondent (formerly of Salon). The article reaches the conclusion that voters do not care about the military service of their Presidential candidates.

To reach this feat of logical deduction, Jake focused primarily on the 1992, 1996 and 2000 Presidential elections (and the 2000 GOP primary), and the Military Service of each candidate.

There are many, many analytical errors in his approach, sample size being the most obvious. But let’s focus instead on a very common logic error which seems to catch most people unaware:

Controlling for a single variable instead of many when analyzing complex systems.

I would be oversimplifying the situation were I to call this error, well, a mere oversimplification. But that’s what lay at the heart of this fallacy: Taking an extremely complex and dynamic issue — who won the Presidency and why — and then boiling it down to a single, and in this small sample, mostly minor issue. The author might as well have based it upon how many letters were in the men’s first and last names.

Presidential victories are the result of a far more nuanced and multi-faceted set of factors. This issue deserves to be examined in far greater depth . . .

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Category: Media, Politics, War/Defense

Why the president’s record matters

Category: Politics, War/Defense

An Early Christmas ?

Category: Current Affairs, Finance, War/Defense

Chart of the Week

Category: Finance, Media, War/Defense