As was indicated in yesterday's early morning futures trading, the equity markets finished the day off considerably on the notion or risk that the US federal government was moving down the path to default. Don't get me wrong, I believe the risk of a sovereign default by a large developed Western nation is infinitely greater than zero, but that 'default' will likely come via money printing to pay off all the accumulated liabilities, on balance sheet or otherwise. No default will occur from a few statists arguing over which one gets a bigger slice of the lobbyist pie. In any event, I would expect that the debt ceiling and budget impasse will get resolved, at least in the short-term term, and the equity markets will act in kind. That said, I remain bearish on the longer-term outlook noting diminishing economic growth prospects.
Looking at yesterday's price/volume heat map, supply won the day yet again. Demand, expect for in the telecom sector, was nearly nonexistent. As I have stated in previous columns, I still would not be surprised to see a viscous snap back in demand that drives equity prices back towards the yearly highs. The supply side has won the day more times that I can remember in the last few weeks and a counter trend move and reversion to mean could come at any time..... likely to correspond with a resolution to the children's bickering in Washington.
Looking at yesterday's price/volume heat map, supply won the day yet again. Demand, expect for in the telecom sector, was nearly nonexistent. As I have stated in previous columns, I still would not be surprised to see a viscous snap back in demand that drives equity prices back towards the yearly highs. The supply side has won the day more times that I can remember in the last few weeks and a counter trend move and reversion to mean could come at any time..... likely to correspond with a resolution to the children's bickering in Washington.
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