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Thank You, John !

10/27/2015

Almost every family has some goofy, old aunt or uncle who always complains “the end is near, and we’re all going to die.”  Wall Street is like that, especially about all things political.  When the sky is not falling, it is like Sherlock Holmes’ dog that didn’t bark.  The lack of an expected response can be very telling.

Did you know the Federal debt ceiling has to be raised next week?  Did you know that the Federal budget expires December 11th?  Did you know the Federal Highway spending ends in two days?   Now, what could possibly go wrong?

Yet, Wall Street is not over-reacting.  Uncertainty increases bearishness, but Wall Street is not particularly bearish.  (In fact, October has been kind to the bulls.)

The Fix is in!  Wall Street is not over-reacting to this uncertainty, because it is not uncertain.

My expectation is that John Boehner is now free of his radical Republicans and can cut a deal with Democrats.  What a refreshing change!  His expected response would be to delay, blaming it on the Democrats, instead of his own right-wing extremists.  He is above partisan dictates and can now be a statesman!  He can even c-o-m-p-r-o-m-i-s-e . . .

Finally!

All this tells me the market has already factored in a deal.  Therefore, I don’t expect a bullish response when the deal is announced.

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