I guess the plan is to stretch the PR optics out as long as possible. It seems the president and democrats have already rejected the congressional republicans surrender for some reason. It seems the WH and senate democrats would like to extract more concessions beyond what they originally wanted--that being the sequester.
The republicans in the house and senate have rejected that attempt to extract another pound of flesh. That’s where things stand as this is written.
Stocks opened much weaker and then rallied simultaneous with the European close and announcement of another bargaining session at the WH with all parties. Then that meeting was cancelled late allowing the drama to continue. But it seems a deal of sorts will be struck judging by overall market action.
Is the government dysfunctional and operating on PR games? Absolutely. I was thinking today of the aboriginal “talking tree”. There are some villages in northern Australia that are divided in two by a long sturdy fence. In the middle is a Boab tree. The chief from each village stand back to back at each tree to negotiate and settle disputes between the two villages. They don’t look at one another obviously, they just talk. Somehow they make it all work out. Could this work in DC? Not a chance, but it’s almost as bizarre as what passes for negotiations here today.
There is a bullish bent to the market despite current politics and threats of economic Armageddon. This is noted by the bounce higher in late morning and afternoon trading. After all the Fed and QE liquidity is still the wind behind bulls back. The appointment of Janet Yellen to be the next Fed chair only exacerbates the current easy money policies.
It’s hard to trade an event driven market especially on a semi-holiday with banks and government closed.
Volume was modest and breadth per the WSJ was positive despite the lack of deal.
By the time you read this the government drama may be over or not. Clearly markets believe such will be the case and the focus will turn to earnings reports.
Let’s see what happens.
Disclaimer: The charts and comments are only the author’s view of market activity and aren’t recommendations to buy or sell any security. Market sectors and related ETFs are selected based on his opinion as to their importance in providing the viewer a comprehensive summary of market conditions for the featured period. Chart annotations aren’t predictive of any future market action rather they only demonstrate the author’s opinion as to a range of possibilities going forward. More detailed information, including actionable alerts, are available to subscribers at www.etfdigest.com.
Disclaimer: The charts and comments are only the author's view of market activity and aren't recommendations to buy or sell only any security. Market sectors and related ETF's are selected based on his opinion as to their importance in providing the viewer a comprehensive summary of market conditions for the featured period. Chart annotation's aren't predictive of any future market action rather they only demonstrate the author's opinion as to a range of possibilities going forward. More detailed information, including actionable alerts, are available to subscribers at www.etfdigest.com