SPX Stats for Week After Expiration

    Posted by steve on 18th of Sep 2021 at 12:32 pm

    SPX Stats for Week After Expiration

    In addition to this seasonality

    Posted by timebandit on 19th of Sep 2021 at 06:45 am

    In addition to this seasonality bias, there is something occurring in the political arena that could have a negative impact on the markets. The Republicans and Democrats are having a political squabble over raising the debt ceiling. The US government's approved budget expenditures will cause the national debt to exceed the current debt ceiling on September 31. 

    I won't get into the hissy fit the two sides are having over raising the ceiling. Suffice it to say that neither side seems willing to budge. Like I said, the first deadline is September 31. If the debt ceiling is not raised by then, the government will shut down. The Treasury would be able to juggle the books for another three to four weeks in order to service the country's debt obligations. After that, we would go into default as a nation.

    Default is the worst-case scenario. The repercussions of such an event would be, um, extremely not good and would extend globally. Nobody wants this to happen, yet this political game of chicken means it is a possibility. And when something really bad is a possibility, it creates uncertainty. Markets do not like uncertainty.

    This has happened before, but the closest we got to default was in 2011. In that default scare, the deadline when the Treasury would run out of ways to juggle the books was August 2. We were two days from that when Congress finally raised the debt ceiling on July 31.

    I have no idea what will happen this time. We are estimated to be about 5 weeks away from default. This could all go away if there is a deal struck this week or some other solution emerges, such as the bill to raise the ceiling being passed as part of budget reconciliation. That just doesn't look likely today. Maybe it will tomorrow.

    With all that said, here is a chart of $SPX in the year 2011. Note what happened as the debt crisis worsened in July. It doesn't mean it will happen again. It's just a reference point of what could happen the longer the current stalemate lasts.

    Thanks for sharing...along with the

    Posted by steve on 19th of Sep 2021 at 08:42 am

    Thanks for sharing...along with the FOMC next  week this is certainly something to monitor 


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