CALDEIRÃO DE BOLSA

Para aperitivo dos Bulls algumas bolsas abertas ao Domingo tiveram boas valorizações:

Telavive + 3,00
Cairo + 2,40%

JAS

"Shorts to Sleep Poorly Tonight"

By Aaron L. Task
Senior Writer
12/14/2003 05:16 PM EST


"After repeatedly buying the rumor in the summer, traders seem unlikely to sell the news of Saddam Hussein's capture.

In the wake of Sunday's capture of the Iraqi tyrant by U.S. forces, early indications are that Monday will be a day of upward momentum for equities and the dollar -- at least initially -- with corresponding weakness for gold, Treasuries and oil prices.


"Sometimes you get an earnings report or GDP number that has a quantifiable impact," said Greg Valliere, managing director of Charles Schwab's Washington Research Group. "This is more psychological, but you've got to say it's a plus."

Noting last week's disappointing University of Michigan sentiment survey, Valliere suggested the capture of Saddam Hussein "could reverse some of that decrease" in consumer confidence. "If this leads to a decrease of assaults against Americans, it would increase the view we could get out [of Iraq] sooner versus later."

Additionally, the coming week is fairly light in terms of key economic data and/or earnings news, he noted. That means Hussein's capture will likely dominate headlines for the next several days.

Finally, the capture further bolsters President Bush's re-election bid, Valliere said. That's something Wall Street heavily favors, especially compared with the current Democratic front-runner, Howard Dean.

In other words, what's good for Bush is good for the stock market -- and vice versa.

"I think what this has done is dropped a bomb in the middle of the Democratic primary process and helped Bush a great deal," agreed Brian Wesbury, chief economist at Griffin, Kubik, Stephens & Thompson in Chicago. "And I don't think this kind of success will fade rapidly."

Hussein's capture should encourage Iraqis previously afraid of his return to power to work with coalition forces and "coalesce around" the new Iraqi government, Wesbury said. "If that's true, it could be very positive for the world in terms of the risks of a prolonged quagmire [in Iraq] or future terrorist attacks."

Success in Iraq will, in turn, lend support to President Bush's political agenda, including making tax cuts permanent and privatizing social security accounts, all of which are widely embraced by Wall Street. "I don't think this will be a one-day euphoric rally," the economist predicted. "My belief is the energy that spins off will tend to be positive for the economy and financial markets in the months ahead."

In a hint of what might happen Monday for stocks worldwide, Israel's TA-25 index rose 3.4% Sunday to its highest close since Jan. 1, 2001. In overseas currency trading, the euro slid to $1.2168 vs. $1.2276 late Friday, according to Bloomberg. The dollar rose to 108.17 yen vs. 107.78 on Friday.


Even those previously bearish on shares are expecting significant gains early Monday.

"The capture of Saddam Hussein will undoubtedly spark a sizable rally on world bourses tomorrow," Alan Newman, editor of Cross Currents, opined Sunday. Newman plans to cover a short position in the Amex Broker/Dealers Index in expectation of an "emotional response" by market participants.

Other bears are likely to feel compelled to do the same: "Anybody who is short will be scrambling to cover at the open," said Fari Hamzei, president of Hamzei Analytics in Los Angeles. "It's going to be huge day -- I fully expect three-digits on the Dow, easily 100 points."

True to form, the oft-bearish Newman, suggested a celebratory rally Monday "will create a near perfect environment for a top," given that it comes "after 10 months of rally and no price correction of any significance."

Then again, folks like Newman have been trying to call a top seemingly since the rally began. More importantly, Hussein's capture comes after both the Nasdaq Composite and S&P 500 retreated upon hitting significant resistance levels, Hamzei noted. Hussein's capture "was not in the price," he said. "I don't think anybody discounted that."

There are, of course, risks to the rosy scenario most market participants foresee, including the near unanimity of opinion about how Monday will unfold. Additionally, when there are so many hours to anticipate such positive news developments, the impact is often muted by the time trading begins in New York. The greater the anticipation, it seems, the less dramatic the ultimate reality.

Furthermoe, whether he was in active control of the Iraqi resistance or not, Hussein's capture means "the guerrillas are in crisis, and their future is in doubt," George Friedman, chairman and chief intelligence officer of Stratfor, commented via email. "It also means that in order to demonstrate their ongoing determination, they will have to retaliate soon -- and hard."


That said, Friedman described the capture of Saddam Hussein as "the single most important event in Iraq since the end of major hostilities."

In recent months, it seemed as if Wall Street was paying increasingly less attention to developments in Iraq. Hussein's capture will refocus traders' attention on the war, which should be a positive for equities and the dollar Monday, at least initially.

Kibbles & Tid-Bits

With the dollar likely to rally Monday, gold is expected to decline along with Treasury prices. Wesbury observed there's some "flight-to-quality bid" in Treasuries that may be undermined by Hussein's capture. If his capture eases concerns about Iraq turning into a quagmire, that will also hurt Treasuries, as will the presumptive rally in stocks, he said.

"Gold may fall a lot but I think that's a temporary [phenomenon] as long as fed holds fund rate at 1%," Wesbury added, calling the Federal Reserve the "real power" in determining the dollar's fate.

As a long-term bull on gold and related equities, Newman expressed optimism about a potential price correction, noting "we have been waiting for months to be able to add positions in the precious metals sector."

It appears he will get that opportunity Monday."

(in www.realmoney.com)