Friends
As the political sniping and fear mongering continues in Washington, stocks have seen two very quiet down days. As a matter of fact, the market looked like it might want to end in positive territory before news from the White House, that the President would veto the House’s bill, hit the tape at about 2:00 our time. Earnings reports continue to come in droves and, again, for the most part they have been quite good. The result is a market of stocks as opposed to a stock market. We have some companies reacting to good earnings news and bucking the trend to the upside. The problem seems to be that once earnings season is over, all traders will have to occupy their time with political wrangling and macroeconomic worries. God help us. We’ll be back to days of “risk on” or “risk off”.
Regardless, the Dow Jones Industrial Average ended down 91 points for the day. Nasdaq, which had been strong (led by tech stocks) finally gave in and ended down slightly less than 3 points. The S&P 500 closed at 1332, which is still right in the middle of our trading range (1300 – 1350).
There is no real news today (as of this moment anyway) that would signal any significant resolution, but we’ll try to keep you up to date as things transpire. In the meantime, try not to get caught up in all the dire predictions and warnings. Remember, they are negotiating tactics. In terms of Wall Street pundits on television, just remember, how you can tell when a manager is “talking his book”? (We’ve discussed this many time before) – his lips are moving.
The two-year treasury auction saw plenty of demand again today. Whether AAA or AA or whatever, the world still finds comfort in U. S. Treasury securities. To be honest, do U. S. bonds really deserve to be rated AAA anyway, with our balance sheet? That is not really the issue. The issue is confidence that the U.S. will honor its debt. It’s reputation. You only have one, and once it is ruined, it is very difficult to repair. I still believe even politicians in Washington know that.
Have a nice evening everyone.
