So looks like the market is having its debt ceiling freakout. The main question is whether it goes to the 150 day (1640 on the S&P500) or its 200 day (1600). My best guess is that we hold around 1640 (see caveat below).
- I think a lot of people are cheerleading for 1,600 – a decent buying opportunity for those who missed recent rallies.
- Because so many want it, they probably won’t get it. We might get a dip to 1,600 intra-day, but see a lot of pent-up buying somewhere below 1640. And that drives the market back up.
- Just guessing here though. A strong view VERY lightly held…
- FYI, I actually bought a (tiny) amount last Friday with the S&P500 around 1675-1680. I had been betting that Boehner’s “I won’t let us default” leak last week was the beginning of the end. I was wrong. All good – it was a tiny amount of money in a dollar cost averaging style IRA so I’d mostly been looking to buy on any pullback.
CAVEAT: We could lurch into a genuine crisis on par with the House’s TARP rejection in 2008 (followed by a huge crash and a prompt about-face, but with the damage already done). I am still betting that Boehner either capitulates or the Democrats finally throw him a face-saving lifeline. But the wackos could still drive us all off the cliff. The market is finally coming to terms with the Republican Party’s disarray.
- It is now (painfully) clear the House Republicans can’t decide amongst themselves about how to get out of the box canyon they’ve driven into. That is the ONLY way to read today’s “demand” for a new “bipartisan 20 member panel” to make recommendations for deficit reduction. “Bipartisan panel” is Washington speak for “we are can’t come to a decision so lets kick the can down the road.” Since the House Republicans are only negotiating with themselves right now, they clearly don’t have their act together.
- Who is causing the splintering? The House Republicans who seem to genuinely believe the “starve the beast” idea that government can somehow limp along without a debt ceiling increase (it can’t). This sort of magical thinking shouldn’t be surprising from people who routinely deny reality when it conflicts with their beliefs (see creationism, climate change, etc…). However, you would have thought that someone would have sat them down and explained the facts of life over the last week. So you are left to conclude:
- Either the House leadership is REALLY falling down on the communications job
- or (more likely) the House Leadership has REALLY lost all control over their right-wing.
- Regardless of how this comes out, the wackos will just keep driving those intra-party wedges deeper. This does not bode well for the Republicans or the health of the nation. Maybe we bring back the Whigs?
Back from a great weekend in Denver. A traffic-free drive through Yosemite was pretty amazing. Turning back after technical problems in Tonopah , NV (literally 200 miles from anywhere) wasn’t so much fun. Ended up doing the trip by air.