Odds Of Debt Ceiling/Fiscal Cliff Deal By Year End Plummet To 16% On InTrade

Tyler Durden's picture

InTrade may have gotten the Obamacare outcome horribly wrong, but it was spot on in predicting the Obama presidential victory. And if it has continued its accurately predictive ways, it will mean a lot of pain is in store for the market (if not so much the President) very shortly, because the online betting service, now only accessible to offshore based US residents just saw odds on a debt ceiling deal plunge to all time lows of 10% earlier today, before rebounding weakly to 16%. As a reminder, Harry Reid has said on numerous occasions that there will be no Fiscal Cliff resolution without a favorable debt ceiling outcome, which therefore means that according to InTrade the odds of a Fiscal Cliff getting done in 2012 have plunged to 16%, and the probability of a market tumble, as the cliff moving over to 2013 means a cornucopia of unintended consequences, is logically (1-16%).

Furthermore, in his press conference today, Bernanke virtually assured just this outcome when he said that while the Fed has few tools to deal with sliding off the Fiscal Cliff, it can increase the QE amount by a "small amount" which is the only loophole any politicians needs. And with the example set with QE3, when Bernanke effectively responded to what was a political demand with Chuck Schumer's infamous "get to work Mr. Chairman, every single career politician will now lean on Bernanke to provide just that "small amount" to keep stocks from tanking, an outcome even the chairman said he would like to avoid, but one he acknowledged may be necessary to break the Congressional hypnotic trance.

Finally, all of this was predicted here a month ago, right after the presidential election, and just when the fiscal cliff was starting to become the problem. From November 13:

"it is a certainty that in the 15 remaining days it is expected to be session it will get nothing done. Which means, that once again, it will be up to the market, just like last August, just like October of 2008, to implode and to shock Congress into awakening and coming up with a compromise of sorts. Only this time, now that Bernanke has shown he will "get to work" at a moment's notice, the impetus to do anything as a result of even a market plunge will be far less. After all why lose face, and put your career in jeopardy when there is the Fed which, supposedly, can offset a market crash, courtesy of the shining example set by Chuck Schumer."

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Lost Wages's picture

LOL. The clown show is working.

Mr Lennon Hendrix's picture

What did we learn today class?  QE is priced into the equity and bond markets, Bernanke came up with the term "Fiscal Cliff", silver is not priced into the market, and no MSM joint has any idea what is going on.

Iam Yue2's picture

In that Intrade is now out of the U.S. these odds are meaningless; unless you want to attribute value to a mostly illiquid betting market composed of hicks from the sticks in the UK.

The true chance of said deal is 0%.

Freddie's picture

InTrade is about as honest as the online poker sites or real bricks and mortar casinos.  InTrade is another manipulated suckers bet.  

I sure wish they would tell dear mullah that he owns it but they won't.

aldousd's picture

you make the point I was going to make. unless there are people with enough specific knowledge informing their trading on Intrade in europe or elsewhere, then it's not likely that actual data from the Fiscal Cliff situtation will be influential enough to manifest itself in Intrade's prices.  Certainly the interviews on CNN and Bloomberg aren't enough, and that's probably all these foreign retail investors are getting.

The trend is your friend's picture

Raid , Boner, mcCONell, and Pelousy have to wait til they have had their fill of cheap jan 2013 puts b4 they tell the world NO DEAL

RobotTrader's picture

Whatever outcome is the most favorable for the PigMen.

That is what is going to happen.

Maybe Bernanke wants to crash gasoline prices and Treasury yields down even further, so he'll sell the market down if necessary.

Of course, that only brews even stronger consumer spending and ultimately higher prices for XRT and XLY.

Central Banking today is a cinch, just get the Algo Wildebeest Herd moving which ever way you want, and inflation is contained, interest rates remain at rock bottom, and stocks move ever higher after each brief correction.

How easy is that?

Bay of Pigs's picture

LOL. Thanks for putting my mind at ease Robo...

akak's picture

Thanks for stimulating my bowels Robo ....

Texas Ginslinger's picture

Robo, I saw your name and my immediate knee-jerk response was to give you the 2nd down vote.

Sorry about that.

ZeroAvatar's picture

Me too, now I have to recondition myself to "see Robotarder, down arrow, ignore and immediately scroll to next post. 

akak's picture

See the Robodrivel

Let red arrow drop

Do the RoboHop

hop, hop, hop

Mr Lennon Hendrix's picture

If stocks tank so do pensions and IRAs.  Then it does not increase spending and it breeds fear.

Yes it is possible that the PWG went short at the top of the market today to carry some cash over for tomorrow, but as far as trading this market the Pigmen will get long oil and sell dolloars doing it.

CPL's picture

Only if you still get to buy things with your money.


China is going apeshit right now over this.

Squid Vicious's picture

good call Robo! ben shalom is definitely gonna crash gasoline price with $85 billion a month $ printing, and then.... the XRT will soar!! load up the robot-wheel-barrel

buzzsaw99's picture

I would love to see dimon, (ala hank paulson) go to congress and demand one treelion dollars and have them say NYET COMRADE! I would pay to see a market crash that stuck. Let it all burn down.

phoolish's picture

The Bernank's action today is completely consistent w/ there being a done deal that includes more spending.  If "they" are working together then that's what it means.


fonzannoon's picture

This shit is going to go on forever. Stay tuned for the next big fuckin thing!


Rathmullan's picture

The patrami munchin, pinky finger wearing cokeheads who determine market levels have "been there done that" with the the debt ceiling thingy  and (vicariously through europe) the fiscal cliff. So it's "pour me 4 fingers of Glenfiddich 18, cut me a line, turn on here comes honey boo boo and buy on the fucking good news and buy on the fucking bad news". 

IridiumRebel's picture

Is it just me or do things seem to be accelerating?

CPL's picture

If you haven't read.  You must go shopping tonight and get a couple of things.

Vashta Nerada's picture

The 21st is only a week away.

IridiumRebel's picture

I personally think nothing will happen, but if it does, we will be ok compared to most.

ali-ali-al-qomfri's picture

shit to hit the Ceiling fan, I see.

BraveSirRobin's picture

When you jump off a cliff, you will notice a weightless feeling, and the rush of a cool breeze flowing though your curley looks. It's really quite nice, until the sudden deceleration trama.

Vashta Nerada's picture

Over the cliff, let it burn - whichever metaphor you like.

Waiting for the riots in the streets ala Greece is getting tiresome.  Let's just get them started already.

Essential Nexus's picture

*This could be caused by a US resident exiting his position to close his account. Also, the market is for the debt ceiling to be raised, not for the fiscal cliff to be averted. Goldman Sachs considers a debt ceiling raise a "likely" portion of any deal; an increase in the debt ceiling and a solution to the fiscal cliff are not interchangeable concepts.

HurricaneSeason's picture

Goldman is lying again. The debt ceiling will come after the splat of the fiscal cliff. It will be totally unrelated, but cause a similar number of job losses.

falak pema's picture

Lady LAgarde must be sweating blood; other peoples of course. IMF has no blood of its own.

This guy Ray Dalio also sweats blood; he has lost his faith with fiscal cliff + QE4; but whose?

Ray Dalio Explains The Rare Set Of Circumstances That's Making Him Bearish On Markets - Business Insider

Mentaliusanything's picture

In the End a deal will be made despite all the crap talk of "you propose /we propose". Its a fair thing to say each side wants to appear a hard ass but in the end NO One will want to be the one who hurts the litle people.


The debt ceiling will be raised but not by much and the tax increases will be token and the spending cuts sliced thin as Expensive Ham over many years. And so it goes Extend and pretend you have a Congress who cares for you and needs your vote.

On William Shakspeare said "Much ado about nothing" and appearances mean more than substance. Its too far gone to pull the Boner out because the vinigar stoke is so appealing.

Pure Masturbation all of it. One big Yawn

jplotinus's picture

In order to resolve US debt and deficit crises, higher taxes and less spending are requisite factors that ought to be implemented. The fiscal cliff may be a good thing.

Sure, some economists predict a recession. So what? The word " economists" and "prediction" in the same sentence render the remaing part of the sentence and however many paragraphs that may surround it , useless.

There has not been any analysis that I've seen that even considered the possibility that lower deficits might be beneficial.

"The market" always looks for ways to go up. So, let the fiscal cliff come. In any event, as soon as it appears certain no deal to make it worse will be agreed on, msm will be instructed to find good things to say about the outcomes.

Take it easy.

Winston of Oceania's picture

The fiscal cliff is a wet dream for a politician of ANY stripe, you can't be blamed and the swhtf sooner or later anyway...

klockwerks's picture

Sorry Jplot, can't let this one go by. No amount of tax or cuts will help the deficit or debt. It's called simple math and it is not going to happen considering the actors involved. Wish it to be but no way at 16T and climbing and printing 85 billion a month can this ever happen. O is hiring 90 employees per day to work in the public sector, go figure, better yet don't

nmewn's picture

Whooo hooo, I saved a whopping 2% by acting this year.

(Unless the maggots do something retroactively)

chump666's picture

S&P stuck in it's range, Nov and June lows are beaconing.  Fed will need to print hard to cover a "no" debt ceiling being raised.  Which may not juice market, note last session sell off.  Congress should 100% watch China, they might just say enough is enough.

Let thy volatility impact for 2013, bulls expecting a break of the 1475 (after it got slammed in Nov) will have their testes ripped off and used as Martini olives.  For real.

IndicaTive's picture

"testes ripped off and used as Martini olives." Damn man. Beauty.

geno-econ's picture

Lets be realistic.  There will be a deal to save face ,but it will be a devistating surprise to varios business constituencies which will not adjust to the new reality of  austerity.  Even a slight downside to healthcare, construction, defense, retailing etc will be felt by many and have a negative multiplier effect----just as deficits in the past had a positive multiplier effect.  We have been living off the future far too long and now it is payback time. Act accordingly

tip e. canoe's picture
Exchange News ATTENTION U.S. CUSTOMERS Monday, Nov 26, 2012

We are sorry to announce that due to legal and regulatory pressures, Intrade can no longer allow US residents to participate in our real-money prediction markets.

Unfortunately this means that all US residents must begin the process of closing down their Intrade accounts. We strongly urge you to begin this process immediately:


gould's fisker's picture

If they do a deal, two months of calulations later the total amount will be a buck twenty-five.  Meanwhile, behind the curtain the more they calculate the more the realization kicks them in the ass that they, and we, in that order if they get to the we part, are fucked.  After some cold sweats, a little whiskey and pain killers, they get their preening sycophants to escort them out of the building into their waiting car so they can go home and be confident that they are very powerful people and forget about the rest of it.

ZeroAvatar's picture

So go over the cliff, already.  What, $600 billion or so effect on the deficit?  Still need another $800 or $900 billion JUST to make up the deficit.  After that, we can cut some MORE, and we'll use THOSE savings to start paying off the $Trillions in debt.  FUHGEDABOOOUDIT.


The cliff is a joke.  We are so fucked.

ZeroAvatar's picture

The fukers will kick the can, raise the ceiling or eliminate it entirely, and the stock market will SOAR TO ALL TIME RECORDS (nominally).


After inflation, however, neither your college degree in Advanced Navel Gazing nor your T-bill that you found laying on the sidewalk will buy you a cup of coffee.

HurricaneSeason's picture

Boner will let all the taxes go up and voila, $500 Billion off the annual deficit. Then when evrybody is pissed about their taxes going up, he'll demand $250 Billion in government spending cuts before he'll get the votes to raise the debt ceiling another $2.5 Trillion. Boner holds the cards right now and taking $750 Billion in bad checks off the table is a good thing. Of course that will mean 15 million jobs lost in one year unless they are willing to give up a new aircraft carrier or some of the $396 billion in F-35 jets. Snowballs chance in hell of that happening. Adding another $2.5 Trillion to the national debt will raise the interest payments by 15% or about $45 Billion a year, which is about the amount of the cut to the military expected increases that will hollow out the military. Can't keep doing that because interest rates on the debt could go to 3% or 4% on top of that and double the $45 Billion each year. I see as many cliffs coming as Rambo or Rocky movies.