The market's reaction to the Paris attacks have been modest, even at the open, which surprised many observers.
The pattern in the past from these events is that the market sees a short selloff. We saw this with the Russian plane that was downed and following the assault on the offices of satirical magazine Charlie Hebdo.
But then things go back to normal.
France's CAC-40, the broadest measure of the French market, gapped down one percent at the open but mid-session is down about half that. The same goes for Germany, which is down only 0.2 percent.
Luxury stocks like Hermes and LVMH are down only 1 to 2 percent. These were the subject of great speculation over the weekend because they depend partly on Asian tourists coming to Europe. CNBC's Eunice Yoon in Asia said travel agencies in the big Chinese cities have been reporting massive cancellations — in the 50 percent range — of trips to Europe for November and December since the weekend.
Still, the phrase — "This time is different" — was widely cited over the weekend. How is it different?
First, the market has been on a modest downtrend for the past two weeks. Global growth is still fragile and earnings and guidance disappointment has been higher than usual. European and U.S. markets are down roughly 2 percent for the month.
Second, prior terror attacks like the one on Charlie Hebdo or the Boston Marathon bombing were viewed mostly as isolated incidents. But now we have three events — bombings in Beirut aimed at Hezbollah, the downing of the Russian plane in Egypt, and now the Paris attacks — all linked to ISIS, a militant group that calls itself the Islamic State and has established a self-declared caliphate in parts of Syria and Iraq.
All these attacks required significant and possibly central planning. ISIS is no longer fighting in Syria. it has opened fronts on several continents.
There will be more coordinated attacks, particularly between the United States and France. The somewhat isolationist U.K. will likely consider joining. NATO will likely get involved.
The migration crisis will become even more polarized and divisive, now that a Syrian passport that belonged to a migrant who entered the European Union through Greece was found at the scene of one of the attacks. Poland's ministry for European affairs has already said it will not accept migrant quotas. The entire open-border policy created under the Schengen agreement is now open to a breakdown.
The bottom line is that "terrorist risk" is now higher. It all adds up to elevated levels of volatility, at least in the near term.
Not surprisingly, there is much speculation that aerospace and defense companies like Raytheon (which makes the Tomahawk missile), Lockheed Martin (which makes the Hellfire missile), and Boeing (which makes the Joint Direct Attack Munition that converts unguided "dumb" bombs into "smart" bombs) might be beneficiaries.
But these companies and others are also involved in surveillance and border control technology, which is the most likely immediate beneficiary.
Small companies will also see interest. In Europe, Fingerprint Cards, which develops biometric identity screening that analyzes fingerprints and verifies an individual's identity, is up 7 percent.