This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Should You Fear a Market Plummet Whenever Harry Reid Speaks?

The source doubted that Reid would ever back off the position to raise taxes on the wealthiest 2% of income earners -- a buzz saw issue that Boehner's Republicans have refused to agree on.

It's possible that the market ticked lower because it bet that Reid wasn't bluffing, but the indices managed to swing back, albeit not at session highs.

"Small-cap stocks, relative to large-cap stocks, are much more dependent upon U.S. domestic economic growth -- more revenue comes to small-caps than large-caps," said Gayed. "If you look at the way small-caps behaved, sure they fell after Reid's comments, but they didn't underperform; it's not like they were down more in that decline."

Reid roiled markets two Tuesdays ago, Nov. 27, when he said he had been disappointed with how talks had proceeded to that point.

The Senate majority leader is widely considered one of the most powerful political leaders in the country, and his majority Democratic caucus in the U.S. Senate makes it impossible to pass a budget without his approval. In other words, what Boehner's Republican House passes, Reid must approve and vice versa.

Even Reid's power, though, has his limits. Obama, Boehner and Reid have all released negative reactions to the fiscal cliff negotiations that have affected the markets, but some analysts have suggested that markets are becoming immune to the rhetoric, much like the Greek debt talks.

"It's a chance for Harry Reid to do this: 'Hey I can rattle a market, too,'" said Lee Munson, chief investment officer at Portfolio LLC. "Between Boehner and Reid and Obama I have every confidence that they're working this out, and I'm not concerned about the saber-rattling because they have to do it."

The worry has been that if lawmakers hadn't reached a deal before Dec. 25, then nothing would get done before Jan. 1 as most politicians would be on vacation with their families.

Last-minute decisions often have characterized the divided climate in Washington since GOP victories in the 2010 mid-term election split power between the two chambers of Congress.

So maybe Reid, Boehner and Obama simply are waiting for a killer grand finale before 2013.

"It's not going to happen a day sooner, because there's no upside: Politics is a grand theater, so why would we close early?" said Munson. "And it won't help markets, because who wants to deal after Christmas with some huge surge and not be there to deal with it?"

-- Written by Joe Deaux in New York.

>Contact by Email.

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $131.78 -0.20%
FB $80.14 -0.50%
GOOG $539.78 -0.00%
TSLA $251.45 1.62%
YHOO $43.07 -0.71%

Markets

DOW 18,126.12 -36.87 -0.20%
S&P 500 2,120.79 -2.69 -0.13%
NASDAQ 5,097.9760 -8.6170 -0.17%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs