The Washington D.C. Deal Stock Market Rally -- Is It Live or Memorex?
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Stocks have surged on news that a Reid-McConnell deal is nearly at hand. A deal has been reported as being close, and also that John Boehner would put a Senate bill on the floor for a vote in the House of Representatives. As of 10:56 a.m. EST, we have the S&P 500 Index up a sharp 20 points, and the DJIA was up 180 points.
24/7 Wall St. has been monitoring this situation in Washington, D.C., closely for what feels like months but is only about two weeks old. Bloomberg TV has confirmed news, at least we hope it is confirmed, that a deal is nearly at hand. We also have to make several warnings here.
A deal in the Senate was the hope on Tuesday as well, but the House Speaker’s press conference on Tuesday crushed the hopes yet again that a deal was at hand. The markets will move handily on news rather than on long-term impacts. You saw that during the financial meltdown in 2008 and 2009 as proof of this concept.
That being said, investors jumping back into the game right now still have to understand that until the votes are cast on the floor of the House of Representatives, it is not a done deal. Will Ted Cruz and other politicians automatically go along? It is hard to know. There are other party factions at work, and then there is the fact that the “deal” has to be sent to the White House to be signed by President Obama.
It sure seems like a deal is getting closer and closer. We have to at least remind our readers that if anything has been proven throughout the debt ceiling debate two years ago, this new debate (plus the federal government shutdown) and even the financial meltdown of 2008 and 2009, it is that Congress and the president only come together to make resolutions when all other failed efforts would lead to far worse outcomes than actually compromising into an agreement.
Also remember that one vote may not pass, only to pass again the in the next day or two after the politicians see just how bad the reaction is. As always, caveat emptor!
UPDATE, 11:27 a.m. EST: BloombergTV reported that Boehner says no decision has been made on a Senate bill.
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