Strengthening defenses – has been our theme lately; primarily due to a truly complacent behavior by the Senior Averages, while money managers certainly have to be aware of risks, given the ‘air-pockets’ in individual stocks; handful of momentum issues even remotely holding, while most sectors are moribund. 

Sadly, events of the past week have increasingly followed the natural course of a ramp-up into ‘war’, with the enemy realizing the Civilized World has finally hit the end of the ‘denial road’, and is being pushed (ironically by France more so than Russia) into stopping any pretense of seriously engaging the enemy; with limited resources poured into the task. IS and other Islamist extremist groups of course know this, and that’s why (enormous miscalculation on their part that we think it was) their twin attacks on Russia (airliner) and France (multiple site assaults) became the straw that broke the camel’s back (and will reduce IS in time to riding camels if they are still around, the fighters that is). 

It is this realization that contributed to this evening’s global travel alert issued by the State Department (which is a bit contradictory to ‘live your life and don’t be fearful, or you give-in to the terrorists); and perhaps Belgium’s continued as well as onerous total ‘lock-down’ (on business, citizens, students and everyone needing work in the days ahead); which is borne out of total responsibility, and we must assume they know more than we’ve heard, because it’s obvious they have been instilled with fear to the point of virtual mobilization. 

They can’t stop searching for vermin, and they probably believe the vermin are aware they have limited time to launch attacks before they’re discovered via a multitude of ways, given enough time to the authorities. I have contended for a few months that this was the modern equivalent to the run-up to World War 2, or seemed like it. I wish I was wrong; but it increasingly looks every bit as wary as that era; with lock-downs and security sweeps reported or unreported, that haven’t been seen since the early days of World War 2. Remember what was said by the Hanover Germany Police Captain when they evacuated a soccer stadium and fiddled with the story of a ‘truck bomb’ disguised as an ambulance (first they reported it, then they denied that); then the Captain said ‘people will panic if we tell them what’s really going on’. 

That’s the point where it was pretty clear the terror threat has an economic as well as societal impact that was broader, and would be more encompassing as things evolved. In our extended weekend commentary, I pointed-out that this combative trend, in which actions suggest IS will attempt multiple strikes, has an immediate and perhaps prolonged impact on travel, leisure, and reduces an already fragile GDP outlook (really globally not just domestically) further. Quite sad as it was just at a time when France was showing more recovery than lots of other EU members; just at a time when Britain was actually junking perfectly good long-range aircraft (Nimrod); and Germany had just rolled-out the first of its new main-battle tanks (perhaps the world’s best); while opening its arms to ‘mostly’ perfectly deserving refugees; but far too naively accepted without the screening needed.