The zero hour is finally here. One of our major hypotheses for this sequence is a time window in September coupled with a market that is allergic to the dysfunction in Washington. They certainly didn’t bat an eye at the filibuster by Ted Cruz last week, but they are certainly taking the latest vote in the House seriously as the first major showdown of the fall takes center stage. Our take has always been the Tea Party and GOP had to push whatever leverage they had this time around because this is their last and best change to extract something from the President. You’ve seen what they are trying to do. They’ve linked a contraception measure to their bid to keep the government going.
Is this the theater of the absurd? Of course it is. But if you are a poker player and decide to go all in, you ride whatever you have. Just to show you that I’m not taking sides, there’s a bigger problem looming if you can believe it. On Friday, Obama had a conversation with the new supposedly moderate President of Iran and media reports suggest the President is now OK with and acknowledges the Iranians have a nuclear reactor for peaceful use of nuclear energy.
I was stunned and I’m sure the Israelis are as well. Over the weekend I saw this headline materialize: http://www.slate.com/articles/news_and_politics/foreigners/2013/09/neville_chamberlain_was_right_to_cede_czechoslovakia_to_adolf_hitler_seventy.html
This is an article suggesting Neville Chamberlain was right to hand Czechoslovakia over to the Nazis. Now the world has come off its axis.
When you read this article you’ll see the author makes some interesting points. In 1938 Hitler was already too powerful to be stopped by a peacetime British Army. Note to amateur historian, the time to stop Hitler was several years earlier at the Rhineland when even he acknowledged that if the French moved, he would’ve backed off. Not only would he have had to back off, he’d have been finished.
What this author also fails to realize is the German generals were prepared to overthrow Hitler had Chamberlain decided to go to war. Chamberlain couldn’t know it or maybe he could have had British intelligence been on top of its game. But at the end of the day, appeasement is always shameful and will ultimately lead to disaster. The Iranians are very crafty. They’ve even admitted the holocaust happened and condemned it. It’s a departure from the last President. That’s great, but why does my skeptical side think they’ll say anything and everything to get what they want? The lessons from history are you stop evil-minded societies before they get too big and can’t be stopped. From 1933-35 Chancellor Hitler was hailed as a peacemaker too.
In the bigger picture, it’s hard to imagine anything bigger than a government shutdown right now but this Iranian situation takes the cake.
Right now we are in the bottom of the 9th inning with the government shutdown, and still a few weeks away from the debt ceiling. What about the stock market? Let’s look at a couple of NDX charts and it’s instructive to look at tech because it’s been the part of the market that has been outperforming lately. For now I think the Dow already topped.
Doesn’t this look like an ending rising wedge? See the next page for the rest of the story.
Next page: A closer look