In the aftermath of the latest House Republican debacle, the Senate had no choice but to go back to where it was on Thursday morning, and attempt to cobble a deal together. Only unlike Thursday, it now has just a little over 24 hours, and a House that it knows will not play ball with pretty much anything that the Senate proposes (at least not until that ultimate arbiter Joe Biden shows up and starts laughing). So while the outcome of this latest regression to square 0 is unknown, one thing we do know is that when it comes to matters such as these, Harry Reid is one very optimistic guy.
As of moments ago: "Senator Reid and Senator McConnell have re-engaged in negotiations and are optimistic that an agreement is within reach,” said Adam Jentleson, Reid’s spokesman."
- Not to be confused with October 14: "Democratic Majority Leader Harry Reid opened the Senate session by saying he was 'very optimistic we will reach an agreement this week that's reasonable in nature."
- ... or October 13: "As government shutdown talks shift to Senate, Reid optimistic despite no compromises"
- ... or October 9: "I am optimistic, even though that is against my nature, that Republicans will not hold the full faith and credit of the United States hostage,” said Senate Majority Leader Harry Reid, a Nevada Democrat."
- and so forth, and so on...
And sure enough, this was more than sufficient for stawks (in this case manifested by the 1.000 correlated JPY carry trade) which have the attention span of an ADHD vacuum tube on Aderall withdrawal, to forget that absolutely nothing has changed in the past week and that the various parties are now even more polarized than ever and a deal will be that more difficult to pull off, and to soar higher. Oblivious that as long as they keep soaring on "hoap", any real impetus - namely a stock market crash - to get a deal done will not be there.
But such is the market for reactive momo idiots that Bernanke has created.