John Ransom

Pres. Obama got his desired effect today when he took press questions about negotiations between himself and the Republicans on the government shutdown and lifting of the debt ceiling.

Or rather the lack of negotiations between himself and the Republicans.

Wait. Did Obama just call Republicans pedophiles? Seems like Democrats have called the GOP every other name in the book

Because, you know, Pres. Obama won't be threatened by "terrorists" or "arsonist" or "bomb makers," whether they are establishment or Tea Party Republicans, unless of course they're not citizens of United States. Folks like that just have to wait until after the elections when he has a little bit more flexibility to negotiate.

Obama was firm that "members of Congress and the House Republicans in particular don't get to demand ransom in exchange for doing their jobs."

Al Qaeda, North Korea, Iran, Syria, Russia, are altogether a different matter than members of Congress, we know.

The markets almost immediately reacted to the announcement that the president would be holding a press conference today by moving in a downward fashion, sharply. Markets aren't always stupid, they saw this coming. A day that started as an ordinary, orderly retreat ended up being a rout.

Nothing Obama said after 2 PM Eastern time did anything either to help reassure the markets.

Thus far the markets have reacted with surprising maturity and foresight to the government shutdown and the idle threats about default on US debt obligations.

While stock markets have retreated, the retreat has been relatively orderly.

The concern here is that what this administration lacks in sophistication, it tries to make up for in lack of subtlety.

Expect the administration to ratchet up the pressure on Wall Street, now that they've seemed to find a formulation that works to rile up investors.

We're not for the short-term effect on the stock markets, I don't think anybody would care-- outside of the Democratic Party -- whether this government opens back up again.

Expect tomorrow for the talking heads on CNBC and Bloomberg to be banging the gong about how terrible the shutdown is for the stock markets. And while they're right in a sense, they're right for the wrong reasons.

The United States economy is loaded up like a pistol shot right now waiting to fire. The debate in Washington DC is focused on the wrong things. Any decisions about what to do on the budget, the debt ceiling and Obamacare needs to be seen through the prism of whether those decisions will help or hinder the economy.

We've had five years of bouncing along the bottom here in our economy. Any decision in favor of the status quo, which is really what Obama is arguing for, will just keep us bouncing along the bottom.

It's time to look to the past, to the pro-growth policies that have worked previously.

Technically the market still looks fairly good here, with the S&P 500 holding up above its 50 day and 200 day moving averages. A rally here would not necessarily be a big surprise.

How would that happen? Earnings, earnings, earnings.

It's the start of earning seasons, and if earnings surprise to the upside, then the market will carry-on as before.

^SPX Chart

^SPX data by YCharts


John Ransom

John Ransom is the Finance Editor for Townhall Finance.
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