The Other McCain

"One should either write ruthlessly what one believes to be the truth, or else shut up." — Arthur Koestler

BLACK FRIDAY? Betting Market Reaction to Failure of Boehner’s Debt-Ceiling Bill

Posted on | July 29, 2011 | 29 Comments

Drudge Report headlines:

Boehner Delays Vote on Debt...
Limbaugh: We've Been Played...

GALLUP: Obama Rates Higher Than Boehner, Reid on Debt Situation!

Ron Paul: 'Default Is Coming'...

Treasury Contingency Plan on Debt Gives Priority to Bondholders...
Carney: If We Have No Other Alternative We Will 'Take Action'...

Obama faces legal bind if time runs out...

When word came late last night that House Speaker John Boehner didn’t have enough GOP votes to pass his bill, I wrote:

The most obvious possible prediction: The Dow Jones Industrial Average will drop at least 200 points Friday.

Rather than merely predict such a result — talk is cheap — I decided to make the proposition interesting:

Pete Da Tech Guy took the bet. The DJIA closed at 12,240.11 Thursday, so if it closes at 12,040.11 or less Friday, I collect $10. But if the Friday close is 12,040.12 or more, Pete collects $10.

After Pete and I made our friendly wager last night, my buddy John Guardiano started giving me flak about it, saying that among other things I was “playing into the Left’s eagerness to stoke a market downturn so they can force House Republicans to capitulate.”

Here’s the thing: I’m not making a value judgment. It’s irrelevant, as regards my $10 bet, whether the House should or should not pass the Boehner bill. I’m just acting on the knowledge that the market hates uncertainty, which is why the DJIA lost a total 484 points in the past five sessions. And here are the headlines in Friday’s papers:

House Puts Off Debt Vote as Press by Boehner Fails
New York Times

House Leaders Postpone Vote on Debt Plan
Washington Post

House Vote on Boehner Plan Is Delayed
Wall Street Journal

Are you getting my drift here? If the DJIA was losing an average 97 points per day before last night’s big flop, doesn’t it just make sense that Wall Street will be having a Freakout Friday Fire Sale today?

Drew M. at AOSHQ says: “Tomorrow (Friday) is 2Q GDP report day. Should be fun. And by fun I mean, awful.”

The initial reaction to the Big Boehner Bungle from both U.S. futures markets and the Asian markets indicated my common-sense hunch was right. But markets are notoriously unpredictable (otherwise we’d all be rich), so it’s anybody’s guess whether Pete or I will be smiling when the closing bell rings on Wall Street this afternoon.

If you think I’m going to win, you should hit Pete’s tip jar

However, if you think Pete’s going to collect the bet, hit my tip jar.



UPDATE: Morning headling from Bloomberg:

Asian Stocks Decline on U.S. Debt Deadlock

. . . “If a resolution in the U.S. is not reached, clearly the economy will suffer so that demand will wane significantly, and we’ll see pressure on Asian exporter earnings and shares,” said Chris Hall, who helps manage $4 billion of assets at Argo Investments Ltd. in Adelaide. “Earnings are mixed across the spectrum. There are still a lot of unknowns right now, and everyone’s incredibly cautious.” . . .
“Its unbelievable, these guys are not just playing with financial markets but their own constituents’ jobs,” said Sydney-based Shane Oliver, head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “It’s certainly adding to stock-market nervousness. I think they will eventually get a deal that avoids massive spending cuts or default, but the risk is growing that they won’t.” . . .

UPDATE II: Wall Street Journal headline:

European Stocks Plunge on Debt Fears

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Comments

  • Joe

    I think Rush nailed it:  It’s A Trap. 

  • http://twitter.com/FlinginDarts Mr. Dart

    200 points on the DJIA is only about 1.6% .  It wouldn’t be unusual for the market to go down that much on a summer Friday if nothing of importance was going on in Washington.  After all, it’s the last trading day of the month.

  • http://twitter.com/biggator5 BigGator5

    Pete, that was a bad bet. The Dow will dip below 300 points when the day is done. 

    Kill It With Fire!!

  • kerry anderson

    Don’t go squishy OtherMc like your cousin John!

  • http://twitter.com/FilmLadd Ladd Ehlinger Jr.
  • http://thepagantemple.blogspot.com/ ThePaganTemple

    I think its over. When John McCain makes more sense than most other people in Congress, its time to dig a hole, crawl in, and pull the dirt over.

  • John Higgins1990

    Then why do Ryan, West and conservatives like Thomas Sowell support this?  Are they stupid, or just spineless?

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  • Anamika

    Your guess is as good as mine.

  • Anamika

    I always knew you were a passionate type but didn’t know that you were such a pessimist and a cynic who would lose heart so easily, Pagan.

    You can always jump ship and swim to the other side, you will be welcomed with open arms, you–being a pagan and all–will be guarenteed a nice little place in some or the other corner of the left tent to fit right in. Trust me.

  • http://twitter.com/Mutnodjmet Leslie Eastman

    I have a transcript of a presser Obama is giving today. Here is what he is planning to say:

    One DEBT to rule them all, One DEBT to chide them,
    One DEBT to bring them all and in the red-ink bind them.

  • Anamika

    You think you are funny? You think this is a time to make your silly high school teen level parodies about the debt crisis?

  • Joe

    It never gets old.  It is one of the only worthwhile things from the newer star wars films. 

    And stacy, looks like the markets are going where you thought they would.  Unless there is good news soon, looks like you might take this bet. 

    Of course, it will not make up for that bad night on the roulette wheel…

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  • Trader

    Intrade currently has it at

    DOW to close DOWN by 200 points or more on prev close

    Last prediction was: $1.00 / share

    Today’s Change:

    -

    10.0% CHANCE

     http://www.intrade.com/v4/markets/contract/?contractId=750881
    if you want to place your bet

  • http://thepagantemple.blogspot.com/ ThePaganTemple

    Linked (not this post but the blog)-

    The Magical Wonderland Where Only RINOs Make Sense

  • http://twitter.com/FilmLadd Ladd Ehlinger Jr.

    I thought it was funny. Do we need to schedule a proctologist for you to perform a bugectomy, Anamkisa?

  • http://www.redstateeclectic.typepad.com AngelaTC

    It’s not going to drop significantly.  This is all part of the game too. 

    When they get the debt deal done,  the Street knows the Dow will jump, so they’re sitting on the cash waiting to buy back in.

    Americans are indeed suckers.  All Washington has to do is pretend the world as we know it will end if they don’t get a massive amount of new cash printed up, and everybody believes them, even though they’re consistently wrong about every prediction they make.

  • http://www.redstateeclectic.typepad.com AngelaTC

    I love that! It’s  perfect!

  • Anamika

    You think you are even more funny than Lesie the C of Pee’er (of C4P blog) , Ladd? Whydon’t  you just  stick to what you are good at, you know like making vulgar political attack ads.

    You want funny? Who said Lefties have no sense of humour? Here’s one from yours truly… not about the domestic debt crisis but let’s say i tackle American foreign (mis)adventures…

    You realize of course that when Congress ‘brings democracy’ it generally means it’s of no use at all, with the exception of the profit  made bu US companies that get grants to build you ‘infrastructures’ that you don’t need.

    You could wind up with a highway system, or a nuclear power plant where the sun never shines.

    **a cautionary tail tale ** 

    Anal Democracy Update:

    Liberation forces are stalled, due to massive Humoroids blocking their progress.

    We are sending in a team of crack special-forces proctologists, but the administration is contemplating the use of powerful Preparation H-bombs. 

    CNN reporters embedded say that the troops’ morale is high, in spite of the shitty conditions of the battlefield.

    The native inhabitants of this dark land claim that the US forces desire only to ‘colonize’ instead of liberate, but analysts concur that this territory is utterly bereft of resources, save the remnants of last-year’s Xmas dinner.

    Field commanders are on the watch for sewerside bummers, Ex-Lax attacks, and other weapons of insurgency.

    “Gas masks are proving their worth”, commented Corporal Punishment, platoon leader and forward scout. “The bad guys tried to attack us, but we rectum”.

    Stay tuned for ‘late-breaking reports’ as they occur, now and then.

    ==Anamika==
    Omniscient News Service

  • http://www.redstateeclectic.typepad.com AngelaTC

    In America, we spell humor without a “u”.

  • http://twitter.com/FilmLadd Ladd Ehlinger Jr.

    Wow, somebody’s got a really big bug up in there and whatnot.

  • http://twitter.com/FilmLadd Ladd Ehlinger Jr.

    I hope I wasn’t expected to read all of that bipolar, there.

  • DaveO

    I’m shocked! SHOCKED! at your trying to make money off of DJIA!

  • Anonymous

    This often happens when someone forgets to replace the lids on the petri dishes.

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  • Anonymous

    Actually I’m sure it’s much better.

    Dungbat.

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