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:

• These kinds of articles are unabashedly bullish. They fly under the radar so you gotta keep your eyes open for them: “Blackstone Group LP (BX) raised more than $4 billion in 2009 to buy European property assets anticipating that cash-strapped banks would be forced to sell as the region’s debt crisis worsened. Almost all of it sat idle for two years. Today, the inaction has given way to a surge of deals, as lenders from Lloyds Banking Group Plc (LLOY) to Commerzbank AG (CBK) cut loose soured real estate, corporate and consumer loans. Sales of loan portfolios and other unwanted assets by European Union banks could reach 60 billion euros ($82 billion) in face value this year, according to PricewaterhouseCoopers LLP, the most since the firm began tracking data in 2010”. Great sign, love to read stuff like this. When the vultures pick at loans the bottom is almost always in.
• No joke every single article on the interwebs is about this debt ceiling / CR fiasco, so I’m going to give you one and move on. Why the Debt Ceiling is Realistically Irrelevant. “Here’s an important point on the debt ceiling debate by Vincent Reinhart who points out that, if we actually fail to raise the debt ceiling then SOMEONE has to break the law in the USA because the laws that are currently on the books make it impossible not to.” What laws? Well one of these three. “1. The Second Liberty Bond Act of 1917 that establishes the debt ceiling; 2. The Federal Reserve Act that prohibits the Fed from lending directly to the Treasury; or, 3. The 14th Amendment of the Constitution that holds that the debt of the United States government, lawfully issued, will not be questioned.”
• @Michaelsantoli gets it right: This Government debacle vindicates the Fed for not tapering. “His mission is to set the conditions to help Main Street heal economically, and as long as the real economy seems to be underperforming its potential, it will keep him erring on the side of more, rather than less, easy-money efforts”
• So you got that Halloween party coming up and have no idea what to wear right? I got you covered
• # 6 people….#6 .
• I never knew this trick…color me informed: “Typing punctuation can be a drag on an iOS device. Take the humble question mark. First, you must tap 123 key to get to the number and punctuation keyboard, then tap the question-mark (?) key, and then tap the ABC key to get back to the letter keyboard. Tap and hold the 123 key. Now, without removing your finger from the keyboard, slide your finger over to the question-mark key (or any other punctuation mark) and then release. The keyboard will insert your symbol and automatically switch back to the ABC keyboard.”
• Norway? Nope. New Zealand? Nope. Montana? Sure
• Won’t my son be crazy surprised at his next Birthday party !
• Gonna start 2 new hashtags here #placesillneverlive #ragingjealousy Can you believe this thing has a pool? This might be nicer than that Mallorca home from a couple weeks ago.

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.