Okay, that’s an exaggeration, but not by much.
Heady rally for US stocks in the morning comes almost totally unglued in the afternoon, as the euphoria over the tax-cut deal fades quickly, and even as the Irish approve their harsh budget.
Stocks jumped early, as did euro, as did gold, amid Treasurys sell-off. But the risk trade unwinds itself in the afternoon. We figure the main pivot is the euro, which steadily weakened all day, despite the Irish vote. Seems there’s still a few concerned investors out there.
DJIA dips 3 to 11359, after jumping as much as 89 this morning; S&P 500 adds 1 to 1224, Nasdaq Comp rises 4 to 2598. It’s the Dow’s second consecutive down day; notably, it’s the dollar’s second consecutive rising session. Still, Dow’s still up 3.2% on the month so far, and up 8.9% on the year.
Euro fades after rising sharply in the morning. Gold set an intraday record, but then faded as well. Treasurys got hammered early, and while they recouped a little ground, it was nothing like the turnaround in the risk assets.
Is it us, or did Obama sound particularly defensive in his press conference? He may have gotten what he wanted, and the GOP may have gotten what it wanted, in this tax-cut deal. But both sides have to know, in their hearts of hearts, that what they did today will only cause more problems down the road.
Take a look at the details of Ireland’s budget. It’s brutal. It’s absolutely brutal on every front. I’m not even sure it wouldn’t be better for the Irish to bolt the eurozone and just deal with their problems on their own. But nobody can say they didn’t face up to a hard choice.
That’s about all you can say with our hackneyed political class. Look, I’m not totally nuts, I’ll be as happy as the next guy to see my tax rate stable and even get a little extra jingle in my paycheck, courtesy of that payroll tax-cut. But once all that money’s gone, spent or saved or whatever, the nation’s fiscal problems will still be there, like that pusher on the street corner come to collect his bill.