Madrid terror attacks encourage sell-off

The tragic events in Madrid have sent shivers down the backbone of Europe. The subsequent surprise defeat of Aznar and the Popular Party (PP) has, unfortunately, increased the perceived political potency of terrorism. Prior to the tragedy in Spain, the equity markets had rallied from their March 2003 lows back to, and in some cases through, the levels of September 2002. Various confidence indicators suggested general optimism regarding the future, and calculations suggested equities were at fair value. We must examine whether these assumptions are correct and whether the earnings will co...