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Dazed From the Roller Coaster
Posted at 7:04 a.m. EDT on Friday, Nov. 30
Could it be that the U.S. economy is so smoking hot that we don't need to worry about higher taxes for all? Maybe the defense budget doesn't matter as much because everyone sees the profligate nature of the Pentagon, with its ridiculously expensive fighter planes. Maybe the employment benefits don't mean much because people are working off the books anyway. Maybe, with all the little charities and state programs out there that can make up for the federal dollars, we are wrong to be so fretful. Maybe it's all made up by the media -- and, if we didn't know any better, we'd see the changes as mild and realize the whole thing is overblown.
Look, if you are not wondering about these sorts of things, I think you must be brain-dead. Thursday's half-decent rally, coming in the face of horrendous retail numbers and a lack of progress in the talks, makes us feel that the whole thing doesn't matter. Either that or, after the debt downgrade, the public has just become conditioned to believe the consequences aren't meaningful, or that they will at last be avoided. Or, at least, they've been made to feel it has nothing to do with the stock market -- no more than how much the now-evident China expansion has to do with the Chinese stock market.
Think about it. In the span of a day, we started by thinking there was definite progress, then went to thinking there was no progress. Then, by the end of the day we came to this realization: Not only was there no progress, but things have grown worse -- maybe much worse -- with a proposal from the Democrats that basically says, "Taxes are going up and benefits aren't being cut." I mean, Thursday was a day when everyone actually seemed to throw in the towel. President Obama's game plan was very old-fashioned tax-and-spend, and the market lapped it up.
So we come in here Friday, dazed, confused and betting that the market is set up for a fall.
Yet it's very rare that we see a tape that allows you can get off a short like you can here. Perhaps the buyers are propping stocks up; it is the end of the month. Or perhaps they mistakenly believe, now, that the sides have grown farther apart -- that a deal is in the works for the weekend.
I'll say it. It makes no sense to me.