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This Is What Is Happening in Washington Today

Tyler Durden's picture


With the market now responding almost exclusively to political developments (in a bizarro way of course: US-China trade war is bad for the USD, hence good for stocks), fundamentals long forgotten, and as a result HFT algos now moving primarily to FX trading (just read the following story about a Reuters data feed break causing a currency spike), focusing on politics, especially with both the US and China having fired the first trade war shots, will be unfortunately increasingly more important. Thus, here is what to expect out of our (and by our we naturally mean Wall Street's) "best and brightest" representatives today.

From Goldman Sachs

Free trade deals likely to pass the House and Senate, along with a number of hearings, and continued action on the Volcker Rule…

10:00 am -- Republican leadership press conference. Now that the Senate has rejected the President’s jobs package, one of the main questions is whether the House will take up any of the measures on a piecemeal basis as the Senate appears likely to do.  So far, House leaders have signaled they may move certain parts of the package on a standalone basis, but haven't indicated which parts those might be.  Regardless, the most likely path to enactment still seems to be inclusion in the legislation produced by the super committee in November, assuming it is able to reach some  type of agreement.

10:00 am -- SEC open meeting on Volcker Rule.  The SEC will consider the draft rulemaking on prohibitions on certain investments and trading pursuant to the Volcker Rule enacted in the Dodd Frank Act, as well as registration of swap dealers and “major swap participants.”

10:00 am -- Derivatives regulation. The House Agriculture Committee will review legislative proposals to modify Title VII of the Dodd-Frank Act, which covers derivatives regulation.

10:00 am -- National Infrastructure Bank.  The House Transportation Committee’s title sums up the view of the committee’s Republican leaders: “The National Infrastructure Bank: More Bureaucracy and More Red Tape.”

10:00 am -- House Financial Services Committee votes on capital stock increases for IBRD, IADB, EBRD, and ADB.  The legislation is called “Supporting Economic and National Security by Maintaining U.S. Leadership in Multilateral Development Banks Act.”  However, the more important step is for Congress to actually order the Treasury to write the check providing funding; that occurs as part of the appropriations process, where recapitalization will compete with other domestic priorities.

12:30 pm – Sen. Lindsey Graham (R-SC) speaks on the future of the just-passed currency legislation.  The Senate passed currency legislation aimed at China last night with 63 votes.  In theory, the next event could be the release of the Treasury’s semi-annual report on foreign exchange, which is technically due October 15, but like previous administrations, the Treasury hasn’t been holding to the formal deadline recently.  So far, indications from the House are that hearings will be held on the issue, but there is no plan to consider the Senate’s bill at present.

1:00 pm -- Federal Home Loan Banks.  The House Financial Services Committee will review the state of the FHLB system, which came under new regulation in 2008 but hasn’t seen the same level of legislative focus as the GSEs or the FHA.  The former director of the FHFB (the FHLB system’s former regulator until FHFA took over after 2008) and representatives from the FHLB system and the banking industry will testify.

Afternoon -- House and Senate vote on trade agreements with Columbia, Panama, and South Korea. The House is likely to pass all three agreements, along with renewal of the Trade Adjustment Assistance (TAA) program, which provides training, health benefits, and other assistance for workers displaced by trade competition.  The Senate is expected to vote on the measures later today as well, which would put them on their way to the President’s desk to be signed into law.


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Wed, 10/12/2011 - 09:09 | 1765120 jdelano
jdelano's picture

talk me off the fucking ledge.  

Wed, 10/12/2011 - 09:14 | 1765135 GolfHatesMe
GolfHatesMe's picture

I'm seriously considering the George Costanza strategy to do everything that is the exact opposite of what I feel is right.  All except my Netflix short.

Wed, 10/12/2011 - 09:26 | 1765175 qussl3
qussl3's picture

FOMC better be pretty explicit about QE3 later or things will get interesting.

We are here on a short squeeze and the vague commitment of Germany and France standing behind all EZ banks.

Funny thing is if either try that crap, bye bye AAA.

If they pull the AIG stunt off tho, 2008 redux may take till late 2012 when the EZ econ tanks due to austerity.


Wed, 10/12/2011 - 09:33 | 1765226 jdelano
jdelano's picture

in addition to bye bye AAA, they will need to print.  Euro down, dollar up.  Equities--->toilet.  This rally dies at 1220.  Alcoa misses by 30%, the U.S. initiates a trade war, harrisburg kicks off the chain of muni defaults, unemployment ticks up to 9.3 this week (mathmatically it absolultely has to)  Everything is bullish...until it's not.   

Wed, 10/12/2011 - 09:36 | 1765241 qussl3
qussl3's picture

I'd better careful about EUR QE = EUR/USD down, when the ECB prints, USD is the default carry if rates hold.

The liquidity keeps the music playing and as long as its on, the carry drops, and thats the USD and Yen.

Wed, 10/12/2011 - 10:40 | 1765640 RickyBobby
RickyBobby's picture

I'm with you on the 1220. It's buy the European rumor de jour and sell the news these days but technicals matter. Seems to look like a perfectly flat trading range between 1220 and 1100 and they wanna retest again. My guess is that we trade intra-day above 1220 but we dont close above there like we have twice prior.

If it closes significantly above 1220 its possible we see a breakout to the upside but I am confident we dont see 1350 again before Bernake announces QE4eva. You can't fight the algos. Im not a trader, although I do count myself a psychopath. 

Wed, 10/12/2011 - 10:55 | 1765707 covert
covert's picture

the shortsighted sutpid politicians are selling us out again.


Wed, 10/12/2011 - 09:10 | 1765122 Zgangsta
Zgangsta's picture

Everything is bullish for stocks, so long as we write the headlines for the algos in a positive manner.

Wed, 10/12/2011 - 09:13 | 1765130 Racer
Racer's picture

just need headlines, that's all....

Wed, 10/12/2011 - 09:12 | 1765127 sabra1
sabra1's picture

1:01 pm--entry and exit wounds!

Wed, 10/12/2011 - 09:17 | 1765143 kito
kito's picture

headline should read "this is what is NOT happening in washington today"

Wed, 10/12/2011 - 09:17 | 1765144 gjp
gjp's picture

What sickens me the most is that this rally is being led by the momo names yet again, even after it seemed like a real breakdown only a week ago.  How many 8%+ 5-day trading sessions can you have in a year, and why are we still being led by 100 PE stocks like AMZN and CRM?  It's all just a game ... if only the stakes weren't so high.

Wed, 10/12/2011 - 09:18 | 1765147 GeneMarchbanks
GeneMarchbanks's picture

'10:00 am -- Derivatives regulation'

Now that is funny.

Wed, 10/12/2011 - 09:19 | 1765151 monopoly
monopoly's picture

It is all surreal. But shorting this market is suicide unless you are a day trader and not wiped out.

Wed, 10/12/2011 - 09:21 | 1765156 youngman
youngman's picture

and the hair salon will be packed as many "moments in front of the Camera" will be had by the chosen..

Wed, 10/12/2011 - 09:22 | 1765163 Jim in MN
Jim in MN's picture

Don't forget, the Joint Select Committee on Deficit Reduction will continue to hold secret meetings, fail to release any information to the public, and adjourn for whiskey, hookers, and full information dumps to Wall Street and other corporate lobbyists at 3:30 sharp. 

For their terribly informative website, see


Wed, 10/12/2011 - 09:24 | 1765165 dynamictrader
dynamictrader's picture

For some of us, wanted a bounce higher, now that is here, we fear it. Be careful

of what you wish for. :) Euro has started its move lower.


Wed, 10/12/2011 - 09:26 | 1765173 The Count
The Count's picture

Prepping for the next war


My feeling is that Washington and Europe know that the financial collapse is very likely and what better way to divert attention from the incompetence of politicians than to have everybody focus on a common perceived enemy.

Presto: A plot that kinda calls for military retribution, not sooo bad that immediate action is warranted, but bad enough that the seriousness can be scaled up or down as needed.

This tactic is the oldest one in the book. It was one of Hitler's favorites. Create a problem and then appear as trouble shooter.


Wed, 10/12/2011 - 09:30 | 1765203 Johnny Lawrence
Johnny Lawrence's picture

I love how China's labeled the manipulator, but Bernanke can print $600 billion in new USD.

Wed, 10/12/2011 - 10:21 | 1765542 Sandy15
Sandy15's picture

and continuing to print more and more.........  , that's why the market is going up on NO volume.....  goes up overnight for no reason.......  The Bernack is back to hiding his QE like he did in March 09.

Wed, 10/12/2011 - 09:30 | 1765206 The Deleuzian
The Deleuzian's picture

It's perplexing that something as serious as a trade war stirs in the wind...Originally thought just chest-thumping but these f$#kers look serious...Well back to LULU and PCLN!!!

Wed, 10/12/2011 - 09:41 | 1765263 madbomber
madbomber's picture




Wed, 10/12/2011 - 09:53 | 1765346 adr
adr's picture

Simple question. 

If revenue at company A is estimated at 25% growth next year and total revenue was around $150 million, how does that justify a rise in the stock from $20 to $110 and an increase in market cap from a few hundred million to a few billion?

The defecating asses on TV claim that the 100 P/E is justified because of future revenue growth  but at the current rate of growth it would take a few years to double revenue let alone increase revenue to a level that justifies the rise in the stock. In some cases 20 years of growth has been priced in a stock in less than a year. Somehow that is not insane. Somehow the same stock can keep going up even if the growth doesn't come in as good becuase other stocks had good growth. 

The market goes against all logic. If a trade looks illogical then go for it. Fuck if you invested in Sodastream after its plunge you are up around 20% right now. I can't tell you why because there is no logic behind the move. Having retailers cut your price and clearance out your product is somehow bullish on future growth.

Wed, 10/12/2011 - 10:00 | 1765392 madbomber
madbomber's picture




Wed, 10/12/2011 - 10:30 | 1765590 eddiebe
eddiebe's picture

That's right! Q.E. to infinity or die.  Believe it!

Wed, 10/12/2011 - 12:05 | 1766055 slewie the pi-rat
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it's senior day @ discount grocery?

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