Debt ceiling resolution market rally?
Love an inopportune headline. The message is obvious. Due to the inferred agreement between the House and Senate, the debt ceiling has been raised, ending the speculation that the United States might default on its loans.
Only problem is, the rally didn’t last, so the headline looks kinda stupid. And, it was from the onset for several reasons.
First of all, markets don’t react according to what MIGHT happen, they react to what they know WILL happen. They KNEW the US would not default on the loans even though a lot of media, and the President, were saying it would. So, this agreement doesn’t remove a peril the markets KNEW was never real. What it was looking for was the solution to the debt ceiling crisis, not the crisis itself. What it got was a mixed bag. Debt ceiling is increased, good for the markets. It has budget cuts built in, bad for the markets. It has triggers to cut the military, bad for the markets. It has triggers built to cut Medicare. Bad for the markets.
And, as of this post, it does NOT have an agreement to raise the debt ceiling. Bad for the markets. Bottom line, there is nothing good about this situation other than the fear mongering by the Democrats, social service industries, and the gold market, should be eliminated and money should in general go into the markets a little more than they were. Only those that bet financially that Obama and Harry Reid were telling the truth would have pulled theirs out up to this point.