But there's a little more to it than that. There's a long history of analysis around geopolitical crisis. In general, the best trades have been, "Sell off going into geopolitical risk" and "Buy on the event, or on belief the event is not happening."
Birinyi's Rob Leiphart sent a note to clients this morning noting this pattern. In five of five cases of "limited" military engagement going back to 1995 (including Bosnia in 1995, Iraq in 1998, Afghanistan in 1998, Serbia in 1999, and Libya in 2011), markets were flat to down in the two weeks before; in four of five cases markets were up mid-single digits one month later.
On average, the markets were down one percent in the two weeks prior to the events, and up 2.79 percent in the month after.
Of course, this is far from over, and things could get ugly fast (see my Trader Talk note this morning).
Regardless: Markets are lower than they were at the start of the month, and that's good news. With the S&P 500 down roughly three percent this month, roughly half of the decline is due to Syrian concerns in the last week, the other half due to deteriorating economic fundamentals and higher interest rates.
If this attack in Syria is short and sharp, or if it is put off through inaction (a big if), then the markets are back to fundamentals, which have not been good.
The only good news is that we have already had a decline this month. The markets have already priced in some economic weakness. We can always drop much more, but at least we are not sitting at historic highs, as we were at the start of the month.