Never Forget
Thanksgiving is supposed to be a time when family and friends get together to watch football, enjoy a big turkey dinner, giving thanks for the blessing of the harvest, and for the preceding year. But this year’s holiday has been overshadowed by the terrorist attacks in France, and potential attacks in other parts of the world. The world markets may have taken bad news and turned it into good after the French attacks, but what will happen when the attacks target the US and become for frequent?
The S&P may be resilient, but a 9-11 type of attack on the US could lend a devastating blow to the US stock market, and with the Federal Reserve set to raise interest rates and deflation setting in, a terror attack could be a major setback for the S&P, and the world markets. As we have said many times; we live and trade in an ever changing world and environment, and while terrorist attacks on a sovereign state like France or England may be more commonplace than in the US, the shutting down of major banks and institutions, and stopping the flow of money, is one of the best ways to attack the markets.
PreCursor to 9-11
It didn’t seem possible when the news of an attack on New York’s Twin Towers back in 1993. For years, my partner Brian Shepard and I have been in and out of the ‘towers’ seeing everyone from Dean Witter to Cantor Fitzgerald. We had had meetings in the offices, and we ate and drank in many of the restaurants and bars, both in and around the ‘towers’. We didn’t live in NY but we traveled in and out for years going to see traders at the banks and hedge funds. It was part of the business, visiting the Big Apple, and you had to roll with the punches because the traders from NY knew how to party.
A few days before 9-11 Brian and I had just returned from the U.A.E / Dubai. We did business for Sheikh Mohammed’s Dubai Holdings and started traveling there when the population was less than 250,000 people. On our last trip to Dubai, the population had jumped to over 1.2mil. Our desk in the S&P had been battle tested for years. I remember FOX News and the tv’s on the trading floor showing scud missiles from Iraq falling into Israel. The desk had already been through the 87 Crash and the Tech bubble, but Gulf War I and II created some very volatile trade. I remember how the markets reacted to the bombing of US barracks in Lebanon where 241 US soldiers died. It all comes to mind when we traveled in the Middle East, and we were warned not to go to certain places. At one meeting the bank we visited had been hit by machine gun fire. We landed in Chicago after a 21 hour flight late Saturday afternoon and missed Monday. We made it to the trading floor early that fatal day on 9-11. I don’t know for sure why I went in early, but I think it had to do with the time change, we had been in the Middle East for 2 weeks and I remember that it was Sunday night and I knew I had to go to the floor and I could not sleep so I went in early Tuesday. The lady that runs our company wanted to see us, so I remember her standing at the desk at our S&P index operation on the CME trading floor, we were talking when she said ‘Danny look up at the big screen’ and the reports were coming in that a jet struck the South tower. In response, the S&P sold off a little, but there was a lot of confusion, and most people on the floor were saying it was an accident. I remember turning to the the lady from the office and saying ‘That’s no accident, I think that has to do with the Middle East’ and a few seconds later the second jet flew into the North tower. As things unfolded the trading floors were evacuated and the exchanges were closed. As we watched the Twin Towers fall all I could think of was the poor people caught in the buildings. Like many people around the world I saw sick to my stomach. I didn’t want to eat or drink, I was in shock as were millions of others. I knew back then that this was not going to be a normal war where two combatants square off, and remembering all the suicide bombers in Israel, I never forgot my experiences in the Middle East and I never forgot 9-11. I never forgot those volunteers standing in the rubble of the Towers and I’ll never forget the pain and the suffering.
I do not pretend to know the answers, but it’s time for all nations to come together. It’s time to get past the bickering of the US and Russia and find common ground with China and other Nato nations to go after the perpetrators of the French attacks. It’s time for the leadership of the United States to start to take a leadership role in defeating ISIS. Brussels is on its fourth day of being locked down and there are new threats to the US. Today French President François Hollande is going to meet President Obama at the White House to push for more cooperation between Russia and the US, and despite not liking some of the things the Russians are doing ,I have to agree. As I said above; we live in an ever changing world, where nothing stays the same, but that doesn’t mean world powers should not find common ground to wipe ISIS off the map.
In Asia 8 out of 11 markets closed higher (Hang Seng -.35%), and in Europe 11 out of 12 markets are trading lower (DAX -.95%). Today’s economic calendar includes GDP, Corporate Profits, Redbook, S&P Case-Shiller HPI, Consumer Confidence, Richmond Fed Manufacturing Index, State Street Investor Confidence Index, 4-Week Bill Auction, 2-Yr FRN Note Auction, 5-Yr Note Auction and earnings from Campbell Soup Co (CPB), Dollar Tree Inc (DLTR), and Guess? (GES).
Our View: The Turkish downing of a Russian jet fighter is not helping the markets this morning. The European bourses are down across the board and the Russian MICEX is down 2.10%. Like I said in the video yesterday there are a lot of economic reports out today and tomorrow. The CME is closed all day Thursday and open for a half day on Friday. We knew the stats the Monday after the November expiration were weak, and we didn’t think the ESZ15 would rally early in the week, and so far that’s how things are working. It’s 6:30 CT and the futures are down 11 handles at 2073.25. Our view is that we see some type of bounce. We lean to selling the rallies with tight stops. We are looking for a Thanksgiving bounce but we won’t start looking for that low until Wednesday.
‘The S&P 500; Terror Alerts and the Holidays’
As always; please use protective buy and sell stops when trading futures and options.
- In Asia 8 out of 11 markets closed higher : Shanghai Comp. +.16%, Hang Seng -.35%, Nikkei +.23%
- In Europe 11 out of 12 markets are trading lower : CAC -1.50%, DAX -.95%, FTSE -.94% at 6:00am CT
- Fair Value: S&P -2.85, NASDAQ -1.45, Dow -35.30
- Total Volume: 976,000 ESZ and 1.8k SPZ
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