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The Breakingviews column in this morning's Wall Street Journal Europe (sub. req.) had the following to say about yesterday's foiled terror attack:

The foiled plot to blow up as many as 10 aircraft flying between the U.K. and the U.S. is a reminder that political risks to the global economy are mounting. It's just over a year after the last big terrorist outrage in Europe -- the July 7 bomb attacks in London. Perhaps investors had become too complacent. Despite the deteriorating situation in the Middle East, the markets snapped back quickly after the correction in May and June. The markets did not seem worried the conflict would upset the global economy.

The editors feel that is most likely the correct assessment. Then go on to point out that events in Lebanon and Iraq have yet to spill over into a wider regional crisis.

They end this first segment of the column with this:

That suggests the bigger threat to the markets is still economic. Inflation is picking up. Interest rates are rising. Growth is expected to slow in the U.S. The Federal Reserve is trying to steer a precarious course between fending off inflation and not squeezing consumers so hard they lose their nerve. A successful terrorist attack could at any moment upset that calculation. But until then, investors should focus their anxiety on whether the Fed is up to the task.

Regular readers know I don't "do" the top-down stuff. It's too often just market noise that doesn't mean anything much over the long term, IMHO.

But I respect the Breakingviews editors immensely, and enjoy their analysis.

Source: Inflation, Not Terrorism or War, is the Real Market Threat