Tuesday, 18 March 2003  8:30 am
The 281 point rally yesterday demonstrated one thing very clearly: Wall Street backs President Bush's war on terrorism and on Iraq. This is not to say that many other Americans don't back it as well, of course. But for the people who work in lower Manhattan, it is a personal matter. They were personally attacked without any provocation, with many of their friends and family killed. There is still a huge hole in the ground serving as a daily reminder where two of the world's most famous buildings stood. Many surrounding buildings are still uninhabitable. We all recall the scene of President Bush visiting Ground Zero shortly after 9/11/2001, and a fireman saying to him "go get the people responsible for this", to which a visibly shaken President responded "I will".  To the degree that Sadam Hussein is linked to al Qaeda, and US and UK administrations says they are, Wall Street backs going after Sadam. It's that simple.

In this new environment that began yesterday, very little will get anyone's attention other than the war in Iraq and the decapitation of al Qaeda. For example, a couple of companies released some bad news yesterday, the type of bad news that would have captured the attention of the news media only a week ago, and caused the stocks involved to be sold off. Instead, these companies received almost no attention and, incredibly, their stock rallied along with 90% of the other US stocks yesterday. In another example, Verizon announced a fascinating new high-bandwidth data service yesterday that is compatible with both Wi-Fi and 3G. Nobody noticed.

For the immediate term, all attention will be on Iraq and al Qaeda. Don't worry, though - Wall Streeters will gun the markets to show their appreciation of the military campaign, and stock investors will be rewarded for the first time in three years. If the rally is sustained long enough, the bear market will be declared over, consumer and business confidence will improve, IPOs and acquisitions will return, pension funds will return to financial health, venture capital will get out of deadlock, and capital will become much more accessible to businesses large and small.