Wall Street Too Stupid to Worry

There were few headlines out of the Middle East over the weekend, mainly because only Israel and Iran are capable of judging the damage, and neither is saying much. Wall Street, on the other hand, seems quite confident that whatever is happening, and irrespective of the outcome, it will be quite bullish for stocks. As much was evident on Friday, when the lunatic sector (aka ‘the Magnificent Seven’) bounced back from heavy losses early in the session, then spent the remainder of the day building a plateau from which stocks can launch anew when the all-clear signal comes. This would be appallingly reckless behavior, but we have become used to it as the stock market has increasingly decoupled from geopolitical and even economic reality over the last decade or so.

It’s possible investors are simply envisioning a brighter tomorrow, with Iran no longer able to export terror to the world. China and North Korea will continue to threaten, of course. But their ability to spread malice and death will be significantly impaired once Israel has cut off the arms and legs of their Iranian proxies. Jihadism will still be with us, and active to the extent its chief sponsor, Qatar, has plenty of crude oil to sell. But perhaps with the inspiration of nuclear terror in remission for a few years, and an entire generation of jihadi leaders rubbed out by Israel, the world might enjoy a period of relative peacefulness. How odd would that be?  [Check out my latest interview on This Week in Money,  It delves into the mania that has seized investors in stock and real estate assets.]