What people don't realize is that politicians are all Grinches, on both sides of the aisle, and they aren't going to give us anything good because neither party cares about business. Think about how everything from Washington has played out for years. Take this last fracas. If you recall, we had the last Fed meeting and it produced a spectacular rally as the Fed said it wasn't going to taper.
Then, literally, two days after that great rally, we began to hear about how the possibility of a government shutdown and a debt-ceiling wrangle. At first, we ignored it because we figured that the president and Congress wouldn't let any shutdown go on too long and we would never default on our debt. But then it dawned on us that the hatred was so thick between some of the GOP and the president that perhaps, just maybe, the shutdown won't be solved quickly and the debt-ceiling tussle could be far more serious than we thought.
Then we actually get the government shutdown, which hammers the market. And then we got the second punch: the debt-ceiling fight brinksmanship, where it was clear, at least to me, that we had to go down to the last hour before a deal could be reached on either. It was so patently obvious to all but the Santa believers that the issue wouldn't be resolved until right before Armageddon. But the market didn't look at it that way and it kept trading down, bottoming at a 6% decline from the top.
And then we got the deal.Nothing's new to that rhythm. In fact, if you look at the charts it's obvious what we keep getting: a big run in the stock market courtesy of better-than-expected earnings and then a big sell-off when Washington in any form -- president, Fed, Congress, taxes, whatever -- gets back on the agenda. Then that's resolved and we get another run when Washington recedes again. Now we've had our break. With the employment number tomorrow morning the chatter and the pain should begin anew and you can do one of two things: sell some stock because the taper talk will run thick, or the recession chatter will take over. Or just strap yourself to the mast and ignore the sirens. Frankly, I would split the difference. Sell some tomorrow and get ready to buy it back when the taper talk recedes again.
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