Weird day that could have been a huge victory for the bulls, but which will end with them feeling ill.But first, the scoreboard:
S&P 500: +0.28
And now, the top stories:
- For the most part, the December news lull continued in very early Tuesday trading. Equities in China were higher despite more rate cut talk. Europe was nicely higher, despite any actual fiscal action to stem the contagion. For now the ECB is there with its backstop.
- In Ireland, the austerity budget was introduced, by all appearances it should pass.
- All though the night it was “risk on” with precious metals surging, and US futures going nuts (right around 4:00 AM). All was hunky dory, and in the early going stocks were up about 1%.
- But the story that began to emerge very early on was that the “deal” that Obama announced yesterday on taxes and unemployment insurance extension was not looking solid. Early on Dick Durbin said support may not be there in the Senate. VP Biden was dispatched to Capitol Hill to save the effort.
- Still stocks held up, and what’s more the rally was bulletproof. No caveats. The dollar was even up against gold and the yen, and bonds sold off hard. Very hard. It wasn’t just selling at the 10- and 30-year durations, but even a 3-year auction went poorly. The 7-year was crushed. All day the mood was RISK ON on every level.
- Then Obama came on at 2:20 to defend his tax deal, and that’s when things went off the rails. The President got the angriest he’s ever been in public, lashing out at Democrats who may torpedo the tax deal and prevent a compromise. This made it plane that the tax deal was in trouble, and combined with some headlines about a ramp up in the investigation, stocks tumbled, giving up all of their gains for the day. Click here to see video of Obama getting furious >
- But the bond carnage continued all day, with 10-year yields hitting 3.13%. Gold and silver really got clobbered after surging earlier in the day. Oil, which had been above $90, fell closer to $88.
- Meanwhile, click here for a guide to America’s looming deflationary risk >
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