While the President plays Chicken Little, the Markets don’t seem to care about the debt ceiling deadlock
Despite President Obama’s effort to roil the markets first on Friday and again Monday night, the world markets refuse to be stampeded into a sell-off even in the face of Secretary Geitner’s threat of an imminent default on the U. S. debt.
The Asian markets were slightly down on Monday but within a normal days trading. Shanghai Composite was down 3%, but primarily in reaction to the Chinese high speed train crash and sell-off of railway stocks. On Tuesday, the Asian Markets were up regaining all of the value they lost on Monday and more. Shanghai Composite was up 14%, for example.
The expected across-the-board decline of stocks at the opening bell Monday simply did not take place. There were slight declines, but no major sell-offs. The Dow dropped 100 points at the opening, but then rallied. S & P 500 and Nasdaq had smaller declines at the opening before rallying. In all the drop was less than 1% of value. Certainly not the collapse some were anticipating.
On Tuesday all 3 major American markets declined precipitously at the opening bell, but began to rally about 10:30. By noon, Nasdaq was posting a gain, and losses on the Dow and S &P 500 were minimal. The markets all appeared to have stabilized heading into the afternoon trading.
Investors apparently have more confidence in our government than do Obama and Democrats. Of course, Obama seems to be hoping for a financial meltdown in order to strengthen his hand. The lack of one should instill renewed courage in Speaker Boehner to stay the course. Not only do investors not seem to believe that the U. S. will default, there is also a growing belief that S & P and Moody’s will not down-grade the government’s triple A bond rating. Seems that Wall Street understands what conservatives have been saying all along: the government has enough revenue coming in each month to meet the interest payment on the debt and then some, even if an agreement isn’t reached.