This morning the market is shrugging off continued protests in Egypt and news of smaller uprising in Nigeria and Jordan. Traders are taking a wait and see approach instead of dumping shares and running for safety just yet – despite Friday’s sell off, the market is seen as having too much momentum to run for cover.
Taking a deeper look at this issue, there was an article in the WSJ yesterday comparing what we’re seeing in Egypt to the protests that occurred in Iran over the summer. The author appeared to find it strange that the market paid no attention to the Iranian protests (even though Iran producers much more oil than Egypt), while focusing intently on the uprising in the Northern African country.
But he’s missing the reason why Egypt is more important. Iran is already controlled by Islamists, Egypt is not and therefore if it falls to the Muslim Brotherhood we’ve got quite a different Middle East on our hands. (Israel is taking these developments very seriously for sure.) While the Muburak regime is an autocracy (despite Vice President Biden’s claim that Muburak is not a dictator, he absolutely is), for the Middle East he was viewed as a stable autocrat -- much of his suppression had been focused on Egypt’s Muslim Brotherhood. This is not simply about oil; it’s about the political tilt of the Middle East.