Courtesy of John Nyaradi.
Super Committee delivers super failure and stocks dive on debt, downgrade concerns
The much vaunted Congressional Super Committee failed in its mandate to offer deficit reduction and the stock market registered its disdain with its dismal failure. Of course this should have not come as a surprise as the same group of people were unable to reach agreement last summer and so why should we have expected any different outcome? As the old saying goes, “insanity is doing the same thing over and over and expecting a different result.”
But the failure of our government to come to grips with an obviously significant problem bodes ill for the future as failure to control our debt can only lead to a “Spanish flu” type situation here one day, lower growth and more possible downgrades of the U.S. credit rating ahead.
In response to the news, major stock indexes plunged with the Dow Jones Industrials (NYSEARCA:DIA) dropping -2.1%, the S&P 500 (NYSEARCA:SPY) losing -1.9% and gold (NYSEARCA:IAU) declining -2.5% while the flight to safety was on with the dollar reaching multi week highs and U.S. Treasuries (NYSEARCA:TLT) soaring.
The dreaded “R” word, recession, appeared more and more frequently on various media channels and Europe continues lurching towards a ledge of its own making.
Significant technical damage was done with today’s sell off with the S&P 500 (NYSEARCA:SPY) losing the important 1200 level, while improvements in the Chicago Fed index and home sales were largely ignored.
Tomorrow brings gross domestic product, Richmond Fed report and publication of the most recent FOMC minutes.
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