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Egypt Unrest and Global Markets

For the moment, the ripple effect on markets has been contained.

The Egyptian stock market is down about 19 percent in the past month. There are no ETFs that cover Egypt exclusively, but the Market Vectors Africa ETF, which has a 20 percent weighting in Egypt, is down about 5 percent in the past few days.

And most traders note that other upheavals in the Mideast — such as the Iraq war — did nothing to keep the bull market from going beginning in early 2003.

However, Egypt is arguably more important than Iraq. If the situation deteriorates, traders point to one commodity to watch: oil. Other knock-on effects: Israel on high alert, refugees in Europe, would also happen depending on the severity of the unrest.

Tthe sitution is very fluid; unconfirmed reports that Mubarek's son has fled the country to London, if confirmed, would be very important, as it removes a likely successor.

Should the situation deteriorate more dramatically, traders seem to agree that in the event of a transition to a true civilian government, it would likely be led by the Muslim Brotherhood, and while they are generally considered to be moderate they would certainly not be particularly friendly to Western interests.

For the moment, most traders believe the Egyptian army will still control the situation, and even if there is a regime change it will still be someone that the military can support. The army is unlikely to support the Muslim Brotherhood — though a number of traders note that it was radical Muslim elements in the army that killed Anwar Sadat.

Of course, a revolutionary regime would put other Arab regimes into play.

Stay tuned to this important story.

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  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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