I really hate to get all political here, but it’s unavoidable. I screamed out today, ‘CONGRESS, GET OUT OF MY MARKET!’ Felt a little good to scream it, and I scared the dog enough to make him leave the room…but five minutes later realized nothing had changed. It seems this drag and slow bleed is doing a number to confidence in our markets and economy. At least Chairman Bernanke is not taking blame for this one. Over the weekend Speaker Boehner said ‘We had better get a deal done before Asian markets open Sunday night’. Well, it’s pretty clear that was a bluff and who didn’t know it – except the sellers of futures (did you notice the SP futures dropped 18 points within 30 minutes of opening but rallied back). The American people are disgusted and tired of this entire circus and want it to end.
The Fear mongers have been hard at work scaring the markets into submission. Been there done that – remember 2008? – of course that was a situation far worse than what we have here. How is this situation not worse? Because there is no endgame for this act – unlike Lehman and nearly AIG. A credit downgrade? Sure, it may happen but why hasn’t the bond market or the dollar reacted negatively? Remember, markets anticipate and but don’t react. They discount the news. I understand a fluid situation which change rapidly brings more uncertainty. But all the predictions financial disaster, calamity and catastrophe are all hype in my opinion. The scare tactics make for great theater, ratings and face time for our politicians – but as you saw with Boehner’s threat, scaring does not work except raising fear.
We see fear in markets with an elevated VIX. Makes total sense as the uncertainty is high. When the deal is done the market will release that fear and hopefully resume its focus on earnings and the economy. What’s sad to say is the attention away from earnings – a truly remarkable time when many companies are showing robust growth and guidance. However, the uncertainty creates fear in the short term and blurs vision about what is truly important. The debt – yes, it’s high and spending is out of control but as an options trader those things are out of my realm. I can only take advantage of the short term fear and trade around it.
As we wind up the month of July we know the focus is on Washington and this debt issue, but let’s not forget about next week – a big jobs report Friday, key economic data, first of the month and more earnings. Let’s hope Tuesday is the last we’ll hear about this mess for awhile.
Love to have your comments below if you so choose!
Enjoy this video – One of my favorite movies, but it seems our politicians are acting this way. See it to the end, maybe when this is over we can send our politicians to the same place!
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Right on Bob!