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  • Markets are often accused by those on the left of being immoral.

  • The reaction to the tax in Paris seems to give this the lie,

  • to what some of called a "patriotic rally" kicking in to lift shares well above where they stood before ISIS killed 129 people on Friday.

  • Equity markets are showing little in the way of patriotism in fact though,

  • if they were, the shares to buy to express solidarity with the City of Light,

  • would be those most exposed to an intensified French terror threat: Aéroports de Paris and Air France-KLM.

  • Instead, markets are doing their usual job as amoral weighers of likely outcomes.

  • Both companies saw their shares hard hit on Monday rebounded by less than the market today.

  • Investors have concluded that extra security checks,

  • the fear of further attacks somewhat reduces the prospects for French tourism, particularly by air.

  • Other European hotel in whole, their stocks have also been hurt, particularly France's Accor.

  • For the amoral processes of the market, have on the other hand, pushed up the price of defense companies.

  • Demand for heavy weapons to bombard the ISIS help parts of Syria will surely rise, but so too will other aspects of defense.

  • Even the supposedly cash-strapped UK government already digging deep

  • to find two billion pounds for extra equipment for the SAS and the resources to hire another 1,900 spies.

  • French defense and aerospace company Thales was picked immediately as an obvious winner.

  • You can see that, up at the top here.

  • With both drones and cybersecurity featuring among its products.

  • As well as the division of the spoils, investors also need to consider the possible overall effect on the economy.

  • Attacks have already sparked political backlash across Europe and even bizarrely among republicans in the US.

  • More obviously relevant though, the insistence by president Hollande

  • to the need for extra spending on state security trumps European austerity demands, sort of illiberal Keynesian stimulus.

  • Overall though, the market reactions being relatively subdued.

  • You can see some of that, there were these sharp drops inroports de Paris, that's the red line,

  • and in Air France, the green line.

  • Relativity overall market, that's the French market here in blue,

  • and you can see, well as there were quite big drops on the day,

  • they're really not particularly out of line with the sorts of things that we've seen earlier this year,

  • and in fact, far less important than what had been going on in the broader market.

  • We can compare here what happened after the September 11th attacks in 2001.

  • The US airlines plunged by a third, that's the airline sector there,

  • and S&P 500 airlines, the blue line shows S&P 500 as a whole,

  • and Northrop Grumman, there, jumped by a third.

  • I picked that just as a sample defense stock, but it was one among many to benefit.

  • Now, this isn't about markets putting a different value on French versus American lives,

  • there were after all, twenty times as many casualties in 2001.

  • Market does of course, put much higher value on both French and American lives compared to Syrian lives,

  • where as many people that has died in Paris died pretty much every day unnoticed by investors.

  • They don't spend much, so really don't matter to global stock markets.

  • Really, smaller reaction in Europe than in the US,

  • flex the fact that what happened doesn't appear to be a major turning point, unlike 2001.

  • France and its European allies, they spent a little more on defense.

  • And they may pummel ISIS controlled areas of Syria a little harder.

  • European Central Bank might be somewhat more willing to ease monetary policy again at next month's meeting.

  • While a specifics of Friday night's tragic attacks were shocking, more terror attacks in Europe were widely expected.

  • And almost certainly be more to come too, for all the spending by governments.

  • For the moment, investors are betting that Parisians and the rest of the continent will carry on with their lives,

  • and there'll be little lasting effect on most companies' costs, revenues or profits.

  • And this might of course turn out not to be correct, but it's amoral not immoral.

Markets are often accused by those on the left of being immoral.

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アモラルな市場 I ショートビュー (Amoral markets I Short View)

  • 54 4
    Kristi Yang に公開 2021 年 01 月 14 日
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