The elimination of Osama bin Laden deals a major psychological blow to al Qaeda and removes a major global terrorism threat, which experts believe will be a net positive for the U.S. financial markets.
The death of the Osama bin Laden at the hands of U.S. Special Forces in a Pakistani city last night is major news on the global terrorism front. His removal from the scene deals a major psychological blow to al Qaeda, Bin Laden's organization.
Bin Laden's removal from the scene has the potential to separate the ethnic Arab al Qaeda from the ethnic Afhgan Taliban, giving our Afghan anti-insurgency efffort a shot in the arm. Any long-term solution to Afghanistan that will allow the U.S. to drawdown its troops has to involve the elimination of al Qaeda and the co-option of all or part of the Taliban insurgents into the Afghan state structure. Bin Laden's death last night brings us closer to that desirable goal of intra-Afghan dialogue and agreement.
Despite the heightened threat of reprisals from al-Qaeda in the near term, bin Laden's removal from the scene should bring down global threat perceptions. This development is particulalry favorable when viewed in the backdrop of the ongoing Arab Spring for democracy and accountable governments. It is major positive for the U.S. and the global economy for democracy to take hold in the Middle East and for al-Qaeda to be marginalized.
As important as the bin Laden story is, I do want to briefly touch on the ongoing earnings parade here. Humana Inc. (NYSE: HUM), the health insurer, came ahead of earnings and revenue expectations. Loews Corp. (NYSE: L), the hotels, financial services and energy conglomerate, missed expectations. The conglomerate is a majority owner of deepwater driller Diamond Offshore Drilling Inc. (NYSE: DO).
The overall thrust of first-quarter earnings reports has been stronger than pre-season expectations. This has reassured the market of the sustainability of corporate earnings despite concerns about margins and global turmoil. Today's bin Laden news should also reassure the markets by bringing down long-term terrorism threats.
Sheraz Mian is Director of Research for Zacks Investment Research Inc. in Chicago.
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