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Wrong on all counts
Michael Hlinka
Part of my job as a business commentator and columnist with CBC Radio and Purchasing b2b magazine is to make sense out of the big events that happen around the world, focusing on the business/economic implications. Therefore, on the morning of August 10th, when I turned on my television and saw long line-ups at Heathrow International Airport and learned that British authorities had uncovered a plot to blow up airplanes in trans-Atlantic flight, my mind went into over-drive: What would be the immediate impact?
"Think, Michael, think, I told myself." On my early morning walk from my home to the CBC Radio Studio, I came up with the following:
The stock markets would get hammered that day. And airlines would really take it on the chin, just as they had after the attack on the World Trade Center five years earlier. Those were no-brainers. In times of uncertainty, there are two safe havens: Gold bullion and the American dollar.
Early reports identified the plot as an Al Queda operation, so reason would dictate yet more conflict in the Middle East. Oil supplies from that region would be threatened, and that in turn would almost inevitably lead to a new all-time high for a barrel of crude. Anything else? No. That just about covered what I thought would happen.
Here's what did happen by the close of trading on August 10. The New York Stock Exchange finished 48 points higher. The Airline Index, a basket of the biggest US-based carriers, had its best one-day showing in weeks—up 1.5 per cent—far stronger than the overall market.
Gold plunged by sixteen dollars an ounce. The American dollar was mixed, down slightly against the Canadian dollar, up versus the pound, pretty much unchanged vis-a-vis the yen. Did I forget anything? Oh, yes: Oil fell by two dollars a barrel. And my only comfort was that at least I was consistent: Wrong on all counts!
What was going on? Maybe you should be telling me. But with the benefit of 20-20 hindsight, I think I figured out what the financial markets were saying. It should have been no surprise that a very small minority in a very large group of people are extremely angry with the US right now and generally hostile to Western interests.
This group has shown it is willing to engage in what we call terrorism. I’m sure they think of it as something quite different but that's neither here nor there.
In other words, this is nothing new and as long as the plots are foiled and no one is killed and property is not destroyed, it’s just business as usual.
Michael Hlinka provides daily business commentary to CBC Radio One and a bi-weekly column syndicated across the CBC network. He also conducts financial planning courses. He may be reached at m_hlinka@hotmail.com
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