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Dysfunctional Washington and Stock Prices

September 2, 2011 – 4:55 pm

The jobs report of course was the big news this week and I do not want to belittle its importance, but this month will see a return of the President and Congress from vacations and the summer recess.

They will start their clash all over again over spending. We already saw the start of that clash in President Obama’s speech on Wednesday when he demanded that Congress pass his temporary transportation bill expiring in September when they return. Congress will likely want to discuss cutting spending and Obama will talk about producing jobs.

For investors the bickering is the point, not who is right or wrong. Both sides are right and wrong. We need more job growth and targeted spending to achieve it. We also need to address the long term spending issues. That means Social Security, Defense and Medicare spending. Those are the major consumers of our tax dollars and if you don’t address them nothing changes. Debt continues to spin out of control.

Both parties know this, but both do not want to compromise. That is going to be the problem for stock investors. The stock market hates uncertainty and you can’t get much more uncertainty than what is going on in Washington.

Good Trading
Steve Peasley

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