Markets rallied strongly yesterday on the revival of the “Gang of Six” deficit reduction plan and better earnings, but the countdown clock to Friday continues.
U.S. markets staged a powerful looking but low volume relief rally based on positive earnings reports and the new found hope that the “Gang of Six” deficit reform package is back on the table.
IBM, Apple and Wells Fargo all checked in with good results while Bank of America had its worst quarterly loss ever and Goldman Sachs disappointed.
Housing starts were stronger than expected while five AAA rated states were put on review by Moody’s due to their reliance on the Federal government revenue.
On Thursday, the European leaders convene their emergency summit to try to cure their ongoing “Greek” problem that the IMF says could spread “contagion” even if a default by Greece is avoided, and a huge chasm still separates the ECB and German Chancellor Angela Merkel over private participation in any fix.
And then, most incredibly, members of the Gang of Six report that this $3.7 Trillion in debt reduction and tax increases won’t be ready in time for passage before the August 2nd deadline for lifting the debt ceiling.
So, I think I’ve got this right. Markets rallied today because of an agreement to a plan that can’t be in place before the U.S. starts defaulting on its debt payments.
And let’s not forget the Tea Party who have never liked this plan and until today have steadfastly stuck to their pledge of “no taxes, period,” which is why the “Gang of Six” plan died in the first place.
Crazy political theatre, indeed.
Dow Jones Industrials (DIA):+202 points; +1.6%
S&P 500(SPY): +21.3 points; +1.6%
NASDAQ 100 (QQQ) +61points; +2.2%
Russell 2000(IWM): +18.6%; +2.2%
June Existing Home Sales
Have a great evening,