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Money Management Executive

Funds Anticipate Quick Resolution in Iraq

March 20, 2003, 1:00 a.m. EST 1 Min Read

A quick and victorious war lasting no more than two or three months is what most mutual fund managers anticipate will take place in Iraq, but if that does not happen, it could spell serious trouble for the markets, which have already factored such a scenario in.

This was the consensus of fund economists and managers late Wednesday, as U.S. and allied troops poised for their first strike against Iraq last night.

In order for the economy to revive and markets to return to normal levels, the Iraqi situation must be resolved, Martin Schulz, director of international equity investments for the Armada Funds, said in written market commentary.

Schulz’s yearning for a resolution in Iraq echoed the obvious sentiment of the Dow, which has risen 741 points over the past six trading days through Wednesday, first when it seemed the war might be delayed, then again as U.S. troops prepared to strike. But the bear market will probably "mute" any rally a victorious war might bring, Schulz added.

Putnam Investments Senior Economic Advisor Robert Goodman told MFMN there is a 90% chance "the war will be short, we are victorious and they are all waiving American flags in Baghdad." If that happens, the markets will take it as a sign the economy has strengthened, and Bush’s "market-friendly economic agenda" will have a good chance of passing, quite possibly bringing about "a booming economy in 2004," Goodman said.

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Money Management Executive
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