Learn the trade here. Make it on tradeMONSTER

Options Trading News

October 15, 2013  Tue 8:11 AM CT

SPX: SEE CHART GET CHAIN FIND STRATEGIES
Either someone knows something about a deal in Washington or we are beyond complacency and have decided that, whatever happens to the bond market because of the debt talks, it doesn't matter.

How else could we not have given up the gains from the other day--gains based on a compromise that would have forestalled default?

Now, it is true that the senators are talking. But without the involvement of someone from the White House, you have to believe that nothing can get done. From what we can tell, President Obama's stance is that the debt ceiling must be raised, the government must be opened and that nothing has to be given up--that there's no give in order to get this.

To me, that's a statement that says the American people and the people of the world are being held hostage by the government, but that the president will be able to portray it as being held hostage by the minority of the Republicans, because the position on the other side of the trade--the Republican side--is too difficult to understand. The president will be able to say, "I want to send those Social Security checks out, but John Boehner and the radical Republicans won't let me."

TheStreet.com logoWhat's weird is that the market is acting as if, at the last minute, the Republicans will simply say, "We lose. We've accomplished nothing, and now we are all going to go back to being a minority party in the country even as we are the majority party in the House." The president is betting that the GOP will avoid the third rail or lose a huge number of seats next year, as he will say the GOP kept you from your check.

This is all about 2014, and not about the U.S. economy, which could go down for the count by next week.

I think that's way too cavalier of the president. The GOP has so far failed to take any stance that involves anything other than, "We will give you a couple of weeks and then we will do this again." That is a non-starter. I think the president has the upper hand because he doesn't care about the economy or the stock market--he just cares about unilateral victory--and it isn't as if the press is going to call him out on it.

After all, other than a few people at various Rupert Murdoch enterprises and a commentator here or there, I don't know a soul in the media who thinks the Tea Party is anything but the worst the American people have to offer.

So it is hard for me to envision a case in which the market shouldn't be down much more as we approach the debt-ceiling deadline. It should be falling at least as much as it gained, if not more so, because the downside is asymmetrical. The dip seems too shallow without more concrete information that I think no one actually knows.
Share this article with your friends


Related Stories

SPX

Job report, ISM dominate calendar

August 1, 2014

Non-farm payrolls and manufacturing data are the big events on today's calendar. Economists forecast that 220,000 jobs were created last month.

SPX

Stocks continue retreat from highs

July 31, 2014

S&P 500 futures are down 0.6 percent. Europe is down across the board, led by a 2 percent selloff in Madrid. Asia was mixed overnight.

SPX

Jobless claims, Exxon results due

July 31, 2014

Initial jobless claims and Exxon Mobil's earnings are the main events on today's calendar. Economists forecast that 310,000 Americans sought unemployment benefits for the first time.

SPX

Stocks rally on strong GDP growth

July 30, 2014

S&P 500 futures accelerate to the upside after second-quarter economic growth and ADP's payroll report beat estimates.

SPX

GDP, Fed, job data lead calendar

July 30, 2014

ADP's private-sector payrolls report for July gets the ball rolling at 8:15 a.m. ET, followed 15 minutes later by second-quarter GDP. The Fed announces its monetary policy at 2 p.m. ET.

Premium Services

Education & Strategy

Why traders hedge with sector ETFs

Many people who are not familiar with options think that they increase risk, but their first and primary purpose is...

View more education articles »
optionMONSTER stockMONSTER tradeMONSTER