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A Badly Needed ‘Crash’

Lost in a truly egregious rout for US equities on Thursday was news that Steve Mnuchin and Nancy Pelosi have agreed to ensure a stopgap funding bill remains "clean" to avoid unnecessary complications which might "accidentally" dead end in a government shutdown. If confirmed (and assuming any such agreement holds) that would presumably mean stimulus talks will remain separate from the wider government funding discussion. I won't delve too deeply into this other than to say that siloing the two negotiations would reduce the odds of a "grand fiscal failure" while perhaps raising the odds that the two sides dig in further on the stimulus stalemate. "House Democrats are for a clean continuing resolution", Pelosi spokesman Drew Hammil told the media. "We do believe that we’ll be able to get funding to avoid a shutdown", White House Press Secretary Kayleigh McEnany remarked. There was no immediate word on the duration of any CR. For market participants accustomed to uninterrupted gains, Thursday was a cold, hard slap in the face. It spoke volumes about the extent to which narrow rallies can beget harrowing routs when losses in the handful of stocks which drive gains in top-heavy ind
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5 comments on “A Badly Needed ‘Crash’

  1. runamok says:

    Another really good post. You punch them out like I can’t believe.

    We know an airpocket is coming up will be quick and furious. That’ll be the time to go in.

    Bring it on.

  2. jyl says:

    Seldom have so few suffered so much to the pleasure of so many!

  3. jyl says:

    On the stimulus front, for Pelosi and Mnuchin to agree to a CR w/o stimulus suggests both see no stimulus as a not intolerable outcome. If stock weakness stimulates them back to the table, who will be more anxious to deal? I suspect the White House.

  4. I suspect political calculations. Government shutdown can paint both parties unless one is clearly taking ownership. I suspect also that there is some deal working, not that this administration can be trusted to honor any agreement. I suspect if there is a deal it is with the Senate. However the Administration will be wanting to take credit for anything worked out in the Senate. It may be we need a market drop to teach them a lesson who is in charge.

  5. When you talk about the suffering few remember that they probably view this as a buying opportunity.

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