These two issues are clear:
1) Republicans management Congress, or no less than they’ll shortly
2) We do not know precisely what Republicans need
The market is discovering out the laborious fact that the Republican get together is a gaggle of loosely-connected lawmakers which can be seemingly solely united by their hatred of Democrats. There are fiscal hawks and those who do not care concerning the deficit. There are MAGA Republicans and traditional free-market conservatives. There are struggle hawks and isolationists.
All of that is with a really slim Home majority and little respiratory room within the Senate. I wrote yesterday that the majority market watchers have been over-estimating how a lot impression the Fed had available on the market selloff and underestimating how a lot was due to Congress.
I feel we’re seeing extra of that immediately with futures down 1% following the failure of yesterday’s efforts to forestall a authorities shutdown.
The invoice by no means had an opportunity to get a wanted two-thirds majority however what was stunning was that 38 Home Republicans voted towards it.
That places lengthy odds on avoiding a authorities shutdown at midnight on Friday.
However that is not the true downside.
The market was pricing in a Republican-controlled Congress that may be market-friendly. As an alternative, we’re beginning off with a fiscal battle and Republican dis-unity. Elon Musk is dictating coverage through Twitter and the Home chief had his bi-partisan efforts torpedoed.
Politics is tough to foretell so possibly this will get again on the rails — I actually imagine that passing a company tax lower will get finished — however as of proper now the whole post-election rally has been worn out.
Spoos day by day
