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Dealing in Debt

July 25, 2011 – 3:52 pm

The main issue on the table for the market this week is no surprise: the debt ceiling. Both sides are trying their best to posture to make themselves look good, and yes, they probably believe they are right in their position feeling they cannot move. But U.S. politics is all about compromise. For the good of the country, if that is the goal for both sides, you would think they would find a solution.

In fact they will. It is when that worries the market. That worry is reflected in stock prices but frankly this Washington induced crisis is having, so far, little effect on either the bond or stock market. Yes, there is some, and things could change, but last week the market was up over 2% and this morning the DOW is down 100 points. Neither suggests a market in panic mood.

Still, it is a game of chicken and in a game of chicken if one side does not give someone gets hurt and in this case it will be the U.S. economy. What is amazing is everyone knows that and still the game goes on.

Good Trading
Steve Peasley

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