In case you have been on the moon the last 18 hours, House Speaker Boehner cancelled last night's vote on the "Plan B" idea for the fiscal cliff. Global markets responded negatively to the news, and last night the Dow futures were down nearly 250 points. Currently, the market has bounced a bit from the morning lows but the Dow is still down around 170 points as of this post.
Hard to call this one ahead of the holiday weekend. Either we see some short covering and the market rallies a bit from here, or folks throw in the towel and take off more risk heading into next week which would likely mean we close at the lows for the day. Take your pick.
Boehner said he is not walking away from the debate with the President, but there are no more votes before Christmas, and then the window before year-end gets pretty narrow. Hard to see how the wide gap we are at right now gets closed in that short of a time frame.
[Related -Greece And The Cemetery For Your Wealth]
We got some more positive economic data this morning in the form of a good durable goods report. Durable goods rose 0.7%, which was better than expected, but ex-transportation the figure rose +1.6% which is pretty strong. And personal spending increased +0.3%.
Asian markets were all in the red last night after the Boehner news. And Europe is lower this morning on the same news as well as some light economic data.
Commodities are mixed with precious metals higher and energy lower. Gold is up a bit to $1654 while oil is trading lower near $88.37.
The 10-year yield is lower to 1.75%. And the volatility index (VIX) is spiking 10% this morning up to the 19.40 level. I've been saying that the market felt a bit complacent lately, so this morning's spike is not all that surprising given the news backdrop. But the VIX hit levels this morning that it hasn't touched since July.
[Related -All Signs Point To Higher Gold Prices]
Trading comment: I am leaning toward this being a one-day plunge and that dip buyers will be back next week trying to squeeze some more profits out of the market into year-end. I don't think that the market was really pinning its hopes on the "Plan B" anyway, so while last night's no vote is an incremental negative it really seems like just more of the same in the fiscal cliff debate. I think bulls will come back next week on hopes that Congress and the President cobble something together before year-end. I plan to nibble on some long trades into the close today.