The debt ceiling debate is an awful, almost-annual slugfest that equally stupefies and mystifies everyone on Wall Street.
Analysts and journalists alike find their inboxes flooded with bank reports about the downside of the country’s descent into shutdown in the event that the government runs out of cash. And in the words of Jeff Macke everyone’s wondering — “why are we beholden to these idiots?”
Everyone except for the most refreshing guys in finance right now. Why are they refreshing? Because they do not care at all — not even one bit — about the debt ceiling fight. They probably don’t even know who Senator Ted Cruz is.
And who are they?
These are your Wall Street chart guys — the guys that trade based solely on price movement. Some of them are Chartered Market Technicians, and some of them just really liked graphs when they were kids. Regardless, at times like these when you want to filter out the screeching noise coming from D.C., they’re the best people to know.
All it takes to get some perspective is a quick e-mail. In my case, it was to J.C. Parets, founder and CEO of Eagle Bay Capital.
Subject line: Do you care about the debt ceiling?
(Nothing in the body of the e-mail. This is a good way to write an e-mail to a Wall Streeter.)
The response. Verbatim: “You’re barking up the wrong tree. I’m just here looking at my charts minding my own business you know what I’m saying? I don’t have time to worry about debt ceilings and the government. These people are a hot mess. I can’t…. You got a bunch of clowns reading each other Dr. Seuss. Why should I worry about what they’re doing, or not doing?”
This isn’t to say that Parets doesn’t know what’s coming. It’s just that his charts tell him, not Ted Cruz.
And in the charts, the signs of something nasty coming on have been appearing for a while.
“With each new high in the S&P 500, less and less stocks are participating,” Parets wrote. “No bueno. Less stocks above their 200 day (in up trends) with each new high, and less NYSE new 52-wk highs with each new high. This is all pointing to lower prices for averages. This is a “market of stocks” after all no?”
In other words, the market’s been running out of steam. To Parets, it doesn’t matter why, especially not if it has to do with unnecessary political squabbling.
“Because what the hell do natural gas futures have to do with Dr. Seuss,” he asked.
So yes, the financial media will trot out Goldman Sachs CEO Lloyd Blankfein, and he’ll say the same thing he says every time. ‘I’m in the business of risk management,” he’ll say, implying gently that Washington is introducing needless risk in the market.
“I don’t like the ballooning fight over the debt ceiling,” Blankfein will say, without mentioning that it already looks bad in charts, of course.
It’s going to waste us some money, is what he means.
And here’s the thing: Everyone talks about how Wall Street, with its seemingly endless supply of campaign donations, owns Washington’s politicians.
How is it that on this issue one issue it seems like Wall Street has no say whatsoever?
It boggles the mind.