Muted Response on Wall Street to Bin Laden's Death

NEIL CAVUTO, HOST OF “YOUR WORLD”: Stocks holding up as Bin Laden goes down.

Welcome, everybody. I am Neil Cavuto.

Well, big board or just big-time bored? Still, while there was no big rally on Wall Street today, in fact, a slight decline, there was no big sell-off either, like the one we saw back in 2001 six days after the terror attacks, when the markets finally opened, and the Dow quickly plunged nearly 700 points. That was then. Former UBS Financial chief Joe Grano not at least all surprised about the market reaction now.

We should say Joe, among many other august titles, Green Beret, war hero, was chairman of the president’s homeland security advisory council back then.

Very good to see you, Joseph.

JOSEPH GRANO JR., FORMER CHAIRMAN, UBS FINANCIAL SERVICES INC.: Neil.

CAVUTO: What do you make of the nonplused market reaction?

GRANO: Oh, I think it’s a little anticlimactic. It’s been 10 years we have been chasing this yahoo.

CAVUTO: Still a big deal, right?

GRANO: Any time you can cut the head of the snake off, you do so.  And I think it’s great that this happened. I think it justifies some of the sacrifices that people have made and the victims. So, I think is excellent.

I do think it’s going to portend into a different focus by terrorists when you move from centralized command-and-control, which there will be some degree of chaos obviously within Al Qaeda. You now move to cells that could go independent, which I think is a different threat and a very serious one.

CAVUTO: You and I were briefly talking during the break. What if this had happened, let’s say, this morning, or mid-market day? Would the reaction have been any different?

GRANO: I don’t think so.

CAVUTO: Really?

GRANO: I think the market is, as you know, I believe a bit overly heated. I think it’s climbed a wall of worry.

I think what has helped it a lot of is corporate earnings and fundamentals. But I doubt if that is sustainable. I don’t think the political risk or the terrorist risk has that much focus or emphasis on the markets at all.

CAVUTO: As a pretty good soldier in your own right -- in your fighting days -- this is why I don’t ask you tough questions.

(LAUGHTER) CAVUTO: Because you can beat me up. But you know a thing or two about trying to remove some uncertainties.  He was a big uncertainty and a big worry. How do you feel now, looking at the global landscape, with at least him removed? Do you worry about the cockroach theory, that there are others out there, maybe even more dangerous, what?

GRANO: Well, I think you get a reaction from independent terrorists that may in fact been looking at Al Qaeda’s lead. I think that the cells can go independent.

And that creates a different security risk for all democratic nations around the world. My advice to Americans, at least in the short-term, be very careful with your travel. Stay away from tourist centers. I do believe...

CAVUTO: What are -- what are tourist centers?

GRANO: Oh, a cafe that Americans may assemble at in Florence or wherever. And I think...

(CROSSTALK) CAVUTO: Oh, so you would extend it beyond the Middle East, to Europe?

GRANO: Oh, absolutely. I would. I would...

(CROSSTALK)

CAVUTO: Would you change your vacation plans...

(CROSSTALK)

GRANO: No. I don’t have any currently.

(LAUGHTER) GRANO: But, no, I just think you have to be careful and a little bit more cognizant of the threat.

(CROSSTALK)

CAVUTO: Yes.

CAVUTO: Now, take a look at the Wall Street reaction today, and you’re quite right. The Dow’s up better than 10 percent, had a great month of April. We’ve been on a tear this year.

Do you just see that as getting long in the tooth, this whole Bin Laden notwithstanding?

GRANO: Yes. I think that the influences of the market today are more fundamental. We have huge deficit issues. We’re going to have rising interest rates, more likely than not.

So, I think that the markets themselves, and you can’t underestimate the market. It’s generally six months ahead of all of us. And I, for one, think that you’re going to see a little bit of pause here and a drawback, but I hope I’m wrong. But that’s what I see.

CAVUTO: Now, we just saw something -- and Sam and Pam, if we could show this again -- the dollar. I know you look at this. You’re a bit of a wonk about it. But you have always been a big worry about the dollar and its declining value.

And just since 9/11, it has lost a third or more of its value. What is that telling you? Why are you worried about that? What’s your big concern?

GRANO: Look, on one hand, the dollar improves our balance of payments, because our goods and services cost less on a relative basis overseas.

But we are a nation that’s not a manufacturing nation per se. Eighty percent or thereabouts of our GDP comes from services. So, you see gasoline at $4.10 a gallon. It could go higher. You see interest rates are going to rise. By the way, as interest rates rise, you should see the dollar strengthen a little bit, because it will show the world that we are recognizing...

(CROSSTALK)

CAVUTO: So, why wasn’t this huge rush to -- or flight to quality to our dollar, to our -- a little bit, but not as much as I would think, given the magnitude of something like this.

GRANO: I think the dollar’s weaknesses are really associated with the lack of will in both parties in addressing a deficit that’s three times greater than it was in...

(CROSSTALK)

CAVUTO: So even if you bring down a terrorist of terrorists...

GRANO: Yes.

CAVUTO: ... even short-lived, it’s not enough to give you oomph?

GRANO: Again, I don’t see the association with the market. I -- I think it does create goodwill within the country and "proud to be American" type of sentiment, but I don’t think it’s going to influence the financials.

CAVUTO: Where were you on 9/11?

GRANO: I was in Midtown.

CAVUTO: Tell me a little about that.

GRANO: Well, fortunately for me, my corporate headquarters was in midtown right on 51st Street. And we were not directly associated.

But we lost five employees. And I know you talked about the market opening on that following Monday and going down 700 points. But the big argument was that Treasury wanted to open the market on Thursday.

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