Word just broke that there will be no vote on Speaker Boehner’s bill tonight. This will breed more uncertainty to the markets. This is not HardBall or Nightline so I will skip to our thoughts as a trader firstly.
I will watch Asia to see how their markets react. So far they are down almost 1 percent as I write. Our levels for SPY are 129.60 and then 128 and 130.70. The pattern of the market has been as we get closer to the August 2 deadline and uncertainty about raising the debt ceiling remains the market finds lower ground. Stocks across the board are being punished.
With this breaking news announcement we would expect the market pattern of lower levels to continue. As always we will confirm this pattern with our price action. We are not just going to go in tomorrow, hit the bids in SPY and all things market stocks and hope for the best (though in this environment that just might work). We will watch the premarket action and watch the way the market trends and follow that trend until our next important technical levels.
Tomorrow should be another market day. You might trade market indexes, market stocks, or the weakest/strongest stocks in the direction of the market. If we start to trend, spread yourself out into more stocks, and then narrow your focus to the ones that are working. Keep searching for that next trading opportunity.
I am disappointed as a trader with the lack of leadership from Wall Street and corporate America. It is time for you to go down to DC and explain what will happen if we do not raise the debt ceiling. Some 100 members of the new Tea Party do not seem to think facts and economic fundamentals are relevant. As Sen. Daniel Patrick Moynihan said, “You are entitled to your own opinion but not your own facts.” The market is going to collapse if the debt ceiling is not raised. Interest rates will spike. Our bond rating will be downgraded. Our standing in the world will be diminished.
Before law school I worked in politics for a few years. If you are a member of a party during a closed door caucus you have a right to be heard. Argue as long and hard as you think necessary supporting your position. Swear, cuss, throw things for all anyone cares. But then when the Speaker of the House of Representatives, a veteran lawmaker, and your leader asks you to stand with him- you stand with him. If you cannot then you should have never stepped into that caucus, ran as a Republican, got swore in as a Republican, and swore to your oath of office.
Politics is the art of compromise. The Tea Party/Republicans has won. The Democrats have conceded on taxes, cutting Medicare and Social Security, and the amount of cuts to the government. Time to take your victory lap before you send our markets artificially lower and our economy into disrepair. Please end this uncertainty.
12 Comments on “No Vote, more uncertainty”
Compromise is why we are now 14 trillion dollars in debt. That trillion, with a t.
I’m glas someone in congress has waked up.
I thought that in America each elected representative cast each vote individually, as per the wishes of their constituents. I never thought they were to play follow the “leader” and vote as a group.
They can voice their opinion and then stand behind it by voting the same way, not the way someone tells them to vote.
What country do you think this is?
Then do not sit in the Republican caucus. Do not accept the label of Republican. Do not take their fund raising money or positions on key committees because you are in the majority.
If they are a separate then fine. Awesome. Just form another caucus. Maybe we need another party.
I think that by 2012 the Tea Party will be a organized official “party”. You shouldn’t need to belong to a party to be elected. Independents are welcome to run for office!
My plan as an investor going into this weekend? Hold my stocks, buy gold, and drink up.
Though I’ve been telling myself to just let it go and not comment… I failed.
I not sure how the Tea Party members are at fault for not passing a bill that Reid says is DOA in the senate and Obama has said he will veto. The republicans have already passed two attempts, but funny, I haven’t heard the democrats described in the media as the “party of no.”
And that somehow $1 or $2 or $3 trillion in spending cuts over the next decade, is anything but window dressing, when the Obama administration itself projects a total deficit of $10 trillion over that time. For a change, the ratings agency was right when it said $4 t is a good down payment.
And those agencies… yes, I get that people do still use them, for what Taleb would likely describe as something like “idiot diligence,” The question is why, given their consistent record of utter failure.
People act like the painful repercussions of a downgrade can somehow be avoided, when the government is effectively insolvent, save for the power to debase the currency.
OK, now back to your regularly scheduled programming, thank you.
I don’t disagree with the political comments posted (quite unusual for the SMB site) but fundamentally I’ve held the opinion the market has no business being bullish. Japan’s economy (2nd largest globally) has been decimated, half of Europe is on the verge of default and shown no real signs of recovery since 2008 and US unemployment still sits at 9-10% ! China’s economy is completely dependent on US consumption so there’s no salvation there. I think some downwards movement is long overdue.
That said, I’ve been trading to the short side and preparing to go long like a hatter the moment an agreement is made and the markets show signs of a bounce even though fundamentally I disagree with it. I’ve absolutely no doubt this will happen shortly but am retaining my shorts on the off-chance it doesn’t !
very funny!
Mark,
China has the world’s second largest economy based on PPP. Japan has become increasingly less relevant in the past 20 years. We consume a lot from China but the main fuel for their economy is their growing middle class which is now the size of the entire US population.
The reason both the bond and stock markets are incredibly strong is a function of supply and demand. Global economy of 60Trillion annually. Those $$ need to go somewhere and so many go to US bonds and stocks. How else would it be possible for yields to be at historic lows while our government borrows hand over first?
Steve
Short term yields are at historic lows because the fed has effectively set them at 0%.
Longer term yields are historically low because the fed has purchased more than $1 trillion of US treasuries via QE1 and QE2, effectively creating money out of thin air to do so, and many market participants expect that additional QE’s will provide a continued artificial drag on rates.
Edward,
First people argued that quantitative easing was artificially depressing rates on treasuries as well as boosting stock prices. It was argued from all corners when QE2 ceased that rates would rise and the market would go down. That did not happen so now the argument has shifted that the “possibility” that the Fed may buy more treasuries is depressing rates? This is silly. There is enormous demand for these assets and that is what keeps their prices high.
Steve
thxs for your thoughts.