These two things are clear:
1) Republicans will control Congress, or at least they will soon
2) We don't know exactly what Republicans want
The market is finding out the hard truth that the Republican party is a tight-knit group of lawmakers seemingly united only by their hatred of the Democrats. There are fiscal hawks and those who don't care about the deficit. There are MAGA Republicans and classic free market conservatives. There are war hawks and loners.
All this with a very narrow House majority and very little breathing room in the Senate. I wrote yesterday that most market watchers were overestimating the Fed's impact on the market selloff and underestimating what was due to Congress.
I think we're seeing more of that today with futures down 1% after yesterday's failed attempts to prevent a government shutdown.
The bill never had a chance of getting the required two-thirds majority but surprisingly 38 House Republicans voted against it.
That puts the chances of avoiding a government shutdown at midnight on Friday long.
But that's not the real problem.
The market had a price in a Republican-controlled Congress that would be friendly to the market. Instead, we are starting a fiscal battle and Republican disunity. Elon Musk dictates policy via Twitter and his bipartisan efforts have been torpedoed by the House leader.
Politics are hard to predict so maybe this will get back on track – I really believe a corporation tax cut will be passed – but so far the total collection is after the election was dismissed.
Spoos every day
