The gravity and severity of the warning
LYNX INV. ADVISORY --- TANOUS, PETER --- President
>> headlines from lockheed martin, the company said it won an $820 million award to build spy planes for the u.s. army and it says that contract, if you will, could grow to as much as $6 billion from $820 million, lockheed martin. shares not reacting much in after hours’ trade, up 1.5% in regular trade today. the same could not be said for adobe systems, up over 5% at one point. the company says third-quarter profit will rise more than originally forecast and sales will be better than expected after strong demand for its design and publishing programs. you probably have used adobe acrobat if you’ve downloaded documents from the internet. here are the numbers, 36 to 41 cents, now, up from 31 to 36. before the expectation, the average estimate now stands at 34 cents on sales of $380 to $400 million. adobe will add employees and raise salaries and will invest more in research. sales at adobe have increased seven straight quarters. you can see the stock is up $2 and change there in the extended hours. the government is warning of a terrorist plot that aims a major attack on financial institutions, symbolic of u.s. influence in the global economy. for more on terrorism and its impact on the markets , we bring in peter tanous, president of lynx investment advisory, managing over $1 billion. beginning where we were with our earlier strategist and that was probably like most of us you were surprised in the direction of the markets today given the gravity and severity of the warning that came out on sunday.
>> not all that surprised, let’s face it. the market has become inured to the terrorist threats and also it’s good to remember that when tom ridge spoke about it, he didn’t speak about something happening on monday, he spoke of a time frame that extends from now until the presidential election. that’s three months to worry about this.
>> it’s interesting because if you look at the s&p 500, it’s been in a narrow trading rainfall, in lehman’s terms, has gone nowhere the better part of the year and the survey results that the number one cause and concern or threat to the economy appears to be terrorism and today we get a real indication that there could be terrorism on very specific sites and the market moves higher.
>> yeah. but, of course, trying to make sense out of a single day’s market move is an exercise in futility and we’ll never get the answer to that. the fact is that the market has been concerned as you correctly said about a slowdown in the economy. remember the second-quarter numbers, for example, and one day does not a market make. we have lots of other things to be concerned about and now we can throw in the new terrorism threat, as well.
>> some people might say that it could be an exercise in futility in terms of trying to guess if, when and where a terrorist attack might be. we’re going on three years, knock wood, here in the u.s. without a major incident.
>> absolutely. and remember what yogi berra said, predictions are very hard to make, especially about the future. that’s where we are today. we’re talking about not only a general terrorist threat but specific targets, specific buildings. the fact that the new york stock exchange is targeted, not surprising, the fact that citicorp is targeted, not surprising, but that they targeted the i.m.f. and world bank is positively bizarre. the i.m.f. and world bank is not an american institution, has no effect on the american economy and the vast majority of its employees are not american.
>> do you invest through this? some have said you can’t predict it and typically the facts of a terrorist attack, unless catastrophic, would be short-lived so do you just invest right on through as if you can’t predict something like a terrorist attack?
>> absolutely, because you just don’t know. and that is why the market and most investors can’t afford to factor it in too importantly into their decision. let’s return to worrying about what god intended us to worry about about the market which is the economy and earnings. that’s where our concern should be.
>> let’s talk about the economy. we’ll get the jobless number out on friday. is that, as an investment adviser, is that an important number to you in your work in terms of how strong that jobs number comes out?
>> matt, this particular one is very important. why? because we just had this little mini shock of a slower-than-expected second-quarter growth, you’ll recall. then on top of that, we had the june job report which was very disappointing, at a little over 100,000, compared with over 300,000 in each of the preceding months. so this jobs report on friday will be very, very important. if it were to mirror the 100,000 of last month, that would be bad, but it’s not expected to.
>> we’ll watch that jobs report alongside with you. stay with us.
