Overnight trading over the past week has been a bipolar affair based on algo sentiment about what is coming out of D.C. But while the last session was optimistic for some inexplicable reason that a deal on both the government shutdown and the debt ceiling out of DC was imminent, today any optimism is gone in the aftermath of the latest comments by Boehner on ABC, in which he implied that a US default is not unavoidable and that it would be used as more political capital, as it would be once again blamed on Obama for not resuming negotiations. As a result both global equities and US futures are down sharpy in overnight trading. And since the government shutdown, better known as a retroactively paid vacation, for everyone but the Pentagon (whose 400,000 workers have been recalled from furlough) continues it means zero government economic statistics in today’s session with the only macro data being the Fed-sourced consumer credit report at 3 pm. This week also marks the unofficial start of the Q3 reporting season in the US with Alcoa doing the usual opening hours after the US closing bell tomorrow. JPMorgan’s and Wells Fargo’s results on Friday are the other main ones to watch to see just how much in reserves are released to pretend that banks are still making money.
As usual, expect disinformation leaks that send the market sharply higher throughout the day, which however will only make the final outcome that much more painful, because as during every US government crisis in the past, stocks have to plunge so they can soar again.
~~~~~~~~~~~~~~~~~
Things to watch closely:
1. The price of gold.
2. The price and volume of the market.
3. The market from 3:55 through 4:00 PM (EST). And then from 4:00 through 4:30 PM when after hour trades are placed.
4. The actions of state governments concerning federal retribution against the people during the shutdown.
5. The safety of your family.
David DeGerolamo
