Good morning. As a matter of principle, I do not spend much time thinking about politics. I don't listen to the radio shows (you know the ones). I don't spend any time at all on sites such as POLITICO, the Drudge Report, etc. And I don't squander time talking to friends, colleagues, and/or family about the goings on in Washington. To clarify, I am not an apathetic voter; I simply don't spend much energy on the game of politics. And from a professional standpoint, I'm of the opinion that my job is to identify what IS going on in the markets, and avoid any discussion of what I believe OUGHT to be happening - either on Wall Street or in Washington.
However, as I have stated a time or two, I do get involved in the political scene when it affects the markets. And there is no question whatsoever that the current driver of the action in the stock market is the three-ring circus going on in Washington. The 4-d debate (Debt, Deficit, Default, and Downgrade) in D.C. has pushed stocks lower four days in a row, with a fifth almost assuredly on tap as investors are unlikely to want to hold long positions over the weekend due to the massive degree of headline risk out there.
As the 4-D debate began, investors of all type, shapes and sizes were outwardly confident that a deal would get done. The parties involved with the "grand bargain" looked to be close to a deal and the "gang of six" appeared to be working together to avoid what most believe would be a financial catastrophe. But after four days of red ink in the stock market, it has become clear that the word debate may be a little too pedestrian to describe what is going on in Washington. No, from where I sit, this appears to be more a case of full-on political warfare with some players seeming unconcerned about the casualties they are wracking up.
As I have opined, the REAL problem isn't the debt or the deficits - heck these issues have been around literally for years - but rather the potential impact on the currently fragile economy. It is clear that after the administration's not-so-stimulative stimulus plan that approached $1 trillion, the Fed's move to ZIRP (zero interest rate policy), QE1, QE2, and now talk of QE3, the economy is still struggling. As such, the Japanese-style deflationary spiral that Ben Bernanke is so afraid of, is still on the table. The bottom line is another shock to the system could easily put the economy back on life support.
This brings us back to the political brinkmanship that is happening in D.C. I don't know about you, but I am growing tired of the "stuff" that passes for politicking in our nation's capitol. I'm tired of hearing each party come to the microphone and slam their opponents. Hey guys, how about a plan that ACTUALLY does something? How about somebody in any of the four contingents stepping up and offering up a plan that will keep the ratings wolf from the door? In short, how about some leadership here instead of all the finger-pointing, chest thumping, and name-calling?
Where is the President's plan? And since they are making such a fuss, where is the Tea Party's plan? What happened to the bipartisan "Gang of Six?" In short, since we seem to be moving closer and closer to more economic distress with each passing day, where is the leadership?
Please accept my apologies for the soapbox speech this morning. However, I am growing weary of the crisis environment in which programs move the market violently in one direction and then the other, and then back the other way - all in response to each and every headline. But, as the saying goes, we have to play the hand we are dealt, not the one we want. And as such, I guess we will continue to spend our days watching the game in D.C. in the hope that the professional politicians somehow, some way, put their campaigns on hold long enough to come up with a deal - before we see another "TARP moment" in the markets.
Turning to this morning... As if the three-ring circus in D.C. weren't enough to keep investors in de-risking mood, the report that Moody's has placed Spain's sovereign debt on review for a possible downgrade is putting more pressure on the markets both here and across the pond.
On the Economic front... The government’s advance report (first look) of the nation’s second quarter GDP shows the economy did not improve to any great degree during the April-June period, growing at an annualized rate of +1.3% during the quarter. This was below the estimates for a growth rate of +1.8% but actually above the first quarter’s downwardly revised growth rate of +0.4% (from +1.9%).
Thought for the day... Best of luck on this Friday and be sure to enjoy the weekend!
Pre-Game Indicators
Here are the Pre-Market indicators we review each morning before the opening bell...
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Major Foreign Markets:
- Australia: -0.85%
- Shanghai: -0.26%
- Hong Kong: -0.58%
- Japan: -0.69%
- France: -1.35%
- Germany: -0.91%
- London: -0.98%
- Australia: -0.85%
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Crude Oil Futures: -$0.59 to $96.85
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Gold: +$9.20 to $1625.40
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Dollar: higher against the Yen, Euro and Pound
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10-Year Bond Yield: Currently trading at 2.885%
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Stocks Futures Ahead of Open in U.S. (relative to fair value):
- S&P 500: -12.73
- Dow Jones Industrial Average: -119
- NASDAQ Composite: -17.22
- S&P 500: -12.73
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The opinions and forecasts expressed are those of David Moenning, founder of TopStockPortfolios.com and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations. The analysis and information in this report and on our website is for informational purposes only. No part of the material presented in this report or on our websites is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program. The opinions and forecasts expressed are those of the editors of TopStockPortfolios and may not actually come to pass. The opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security nor specific investment advice. Stocks should always consult an
Comments
I agree with john..the facts are the facts. Also, we have to remember that Obama got elected making undeliverable promises to the 50% of the population that has no federal tax liability. He bought votes with phony promises of better days for them while barfing the same ole "the rich aren't paying thier fair share" garbage. Another fact that proves my point is that Obama has increased the food stamp program to include over 30% of the population and extended the unemployment benefits to a couple of years!....now that we are 14 trillion in the hole, facing a downgrade, and on a trajectory to an outright bankruptcy of our nation, Obama wants to raise more revenues (taxes), raise the debt ceiling giving him another blank check to try to buy his re-election with more gimmicks. Now that the people have spoken regarding the raising of the debt ceiling loudly and clearly, the old Dems in the Senate, that would have been out of office if they had been up for re-election last year...are just singing the same ole tune and blaming the "extremist" new congressmen for trying to stop a national calamity. The last thing Obama wants is the massive giveaways and payoffs to stop! How else could he possibly have a chance for re-election? His puppet masters need this system to collapse for their takeover as well...just read the books written by his mentors! I believe Obama is a traitor, a liar, and a fraud... and so it is... DW
Do we really need career politicians? Compromise could be possible if the two parties would try to work together. But these career politicians are like children who want their own way. Its my way or no way. I think the congress and senate need all new people elected as well as a new president. NO CAREER POLITICIANS BE ALLOWED TO RUN. But that will never happen until we the people have had enough of their games.
Umm, isn't it obvious, David. As long as there are only two viable parties in the US federal system, the US is doomed to more of the same. What the US needs is third party that can take the midle ground - the end! This doesn't necessarily require an entirely new party, it only requires that the moderate members of each party leave their existing parties to forge a third. The current practice of factions forming ever more radical extremes of the existing parties has got the US where it is today - stuck!
i'd say the tea party has already passed two plans out of the house, both of which were tabled by the dem -controlled senate. the first was the ryan budget, the second was the recent cap-cut-balance. meanwhile the pres put forth a budget , which went down 0-97, again in the dem-controlled senate, and the latter hasn't proposed a fed budget for two years.