Gridlock Reigns

Equities start the day lower as gridlock reigns! I’ll tell you what, here is exactly what we need: a down 6% day. Why do we need that? Because Washington needs the real world to tell them: “stop it, enough, get your Monty Hall on and make a deal.” Barring that level of carnage here is how I see this playing out (version 2, because my version 1 is in a heap on the side of the road). Next Monday is a holiday, Columbus day. Next week is “constituent week”, whatever that is, so not only does Congress have Monday off to celebrate a 15th century Explorer, they also get the rest of the week to sip coffee and eat Five Guys with the voters back home. Where was I going with this? Oh right, here’s the rub: Treasury Secretary Lew told us last week that “the gravy train ends Oct 17” which means, in my opinion, that something has to be done before Friday, Oct 11 or our knucklehead leaders will be absent when the full faith and credit of the United States enters serious jeopardy. So there you have it. Option 1 is a TARP style selloff where we sit here and gasp at the tape (would be an amazing buying oppty) and Option 2 is a deal by Friday. From my seat that’s how I see it playing out, now let’s move on to talking about something much more fun: random stock market price action!

After the open we didn’t get that selloff we desperately needed, in fact we went straight up for the first few hours. Come on people, we need to force Washington’s hand here, make some rash decisions stat! Economic data was…well…nonexistent. How am I supposed to write these recaps without fresh macro data? It’s like a sports writer talking football in July, there’s only so much I can make fun of before I run out of material. I need a PPI print like I need a visit to this restaurant! Can you believe that’s not in the US? Are you kidding me? How does Singapore get that before we do? Gotta be the biggest U.S. failure since Little Bighorn (almost went with Smoot-Hawley Tarriff act there only because I’ve made it a life goal to work “smoot” into a recap. Success!). No real winners of note, certainly nothing worth more than a random mention: ISRG, HCP, NOC, RTN, and NEM. Losers were TRIP, ANF, REGN, GCI, and URBN. Client interest in the market right now is about as robust as their demand for a 3 hr seminar on the history of PEG Ratios (can you imagine) and by lunch we sat on 1,681, down 53bps. Total wasteland out here, crickets. All politicians and no data make Anton a dull boy.

 

The rest of the day was completely sideways and a small selloff closed us at 1,676, down 85bps. The real problem wasn’t price action though it was volume, and I fear the market could become incredibly illiquid soon. We only managed 4.9B shares today, which is way below average. As this thing drags on my gut tells me more and more institutional clients will take a “wait and see” approach. Why do anything in the stock market when American politicians are taking themselves hostage? Thank God nothing crazy is approaching to make this situation even more volatile like, I don’t know, earnings. Wait, AA is tomorrow? Lovely. I’m telling you, we need a down 4% open, I bet we’d get a deal that afternoon.

Final Score: -90bps, S&P500 -85bps, Nasdaq -83bps, Rus2k -116bps.

News Highlights:

We’ll end tonight with 2 links, because I couldn’t decide between them.
The first was given to me by a scholar and a gentlemen, thanks Jason. When people tell you “dance like no one is watching” this will be the inevitable result.

The second is a potent combination of EDM and action sports. I’m a total sucker for both.

Have a good night.