Boehner Listened… Kinda, Sorta
John Boehner didn’t call me (he should have) and I doubt he reads my comments (he should), but at least the republicans figured out that their tactics were not working. They may not have unilaterally raised the debt ceiling long-term, but if the reports are accurate, they are going to offer a short-term raise in exchange for negotiations with the democrats on a variety of fiscal issues.
As you would imagine, the markets responded favorably although Europe led the way as the ECB and Bank of China announced the establishment of bilateral swap lines for the two currencies while we were all asleep.
I have been writing about the “whoosh” day to clean up this neat and orderly little pullback and after Wednesday’s intra-day recovery, it looks like we have at least a short-term rally on our hands. The super bullish case would have stocks going straight to all time highs from here which would really squeeze the bears who are not only positioned negatively for the nonsense in DC but also for a poor earnings season. The moderate case has the market rallying for a few days to a week and then revisiting Wednesday’s low by month end. From there, the year-end rally begins. The bearish case has this little rally ending shortly and then knifing through the recent lows and an elevator shaft style decline.
It’s too early to say which path the market will follow, but I am leaning towards the moderate one.