Does Obama want a market sell-off?
Pushing investors out of complacency could be just what settles the impasse in Washington and reopens the government.
By Jeff Cox
President Barack Obama's best friend could be Wall Street's worst nightmare.
A little market crisis -- not enough to crash the economy into recession but enough to stir public fear that would push Republicans to the negotiating table -- could be just what settles the impasse in Washington and reopens the government, according to investing pros and market observers.
In an exclusive interview with CNBC, the president warned Wall Street that this shutdown could be different. Previous halts in nonessential government activities have caused little market reaction, with major averages actually rising most of the time in the month after the shutdowns are settled.
Obama's remarks indicated to some observers that he is trying to push investors out of the relative complacency they have shown so far. Futures were broadly lower Thursday, indicating markets may be taking heed.
"They feel that a severe market selloff would be helpful to break the logjam," said Greg Valliere, chief political strategist at Potomac Research Group in Washington. "It would be helpful in making the Republicans sue for peace. Obama and [Senate minority leader] Harry Reid believe that."
Twitter was abuzz about the interview, with some sharing Valliere's opinion.
While Valliere said the Democratic president and his chief Senate lieutenant are playing a dangerous game, the political advantage so far has been Obama's.
"All of the players in this game are playing with fire," he said. "This is hardball at its most brutal. They're not inclined to compromise. They want to make the markets squirm."
Wall Street has been unrattled by the shutdown and its ramifications for the debt ceiling battle.
While the stock market sandwiched two modest losses Monday and Wednesday around a small gain Tuesday, interest rates have barely budged. That's consistent with previous shutdowns, though none faced the specter of the government actually defaulting on its obligations.
Obama's approach, though, was beginning to wear thin with some market participants.
"It's obvious this stalemate is going to continue for many days, if not weeks, now based on the 'sharp elbow' responses by the president in the CNBC piece," Todd Schoenberger, managing director at LandColt Capital, said in a statement. "Unless a resolution in Washington happens soon, investors should brace themselves for violent volatility in the equity markets for the foreseeable future."
The nonconciliatory tone bothered some.
"It's very difficult when the president says 'I'll compromise, I'll talk to anyone, as long as you agree with everything I say,' " Steve Grasso, a trader at Stuart Franke, said on CNBC.
Carol Roth of Intercap Merchant Partners called Obama's tone "too subtle if he wants the market's help right now" and said he should have used stronger language about the direction he wanted the Federal Reserve to take.
The president did not discuss whom he would name to replace Fed Chairman Ben Bernanke, whose second term expires in January.
"What's clear from the president's remarks are two things: 1) Despite his claims to the contrary, he is pushing the rhetoric that this is Republicans' fault and, more specifically, tea party Republicans; and 2) that he is out of his depth when discussing financing issues," Roth said.
"While he pandered to small business and the middle class and tried to explain the mandate of the Fed, he is completely unaware or unfazed by the fact that current policies are doing the exact opposite of what he claims he is trying to accomplish."
Anthony Scaramucci, founder at the SkyBridge Capital hedge fund, also faulted the president for lack of leadership.
"His rhetoric about being worried is unsound, he is the one that has to be worried," Scaramucci said. "If he allows the government to default at this hour in our history, it would be a terrible blow to a fragile recovery."
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This man has done nothing for the country except make it a ONE PARTY country. not what our founding fathers were all about. It's HIS or the Democrats way or the highway. Disgraceful.
Of course he does - he will do anything to prove himself right! He doesn't care that he might destroy someones retirement account. After all he wants to take all the money from the middle class and give it to those who are too lazy to work.
Push the Republicans to the negotiating table? He means surrender their principles and cave into all of Obama's socialist demands. More taxes, more spending, MORE DEBT and Obamacare are not the answer.
The American people stand AGAINST Obamacare, they stand against RAISING the DEBT CEILING. They oppose more spending. And they certainly don't want more TAXES heaped upon them.
Obama is a Lazy, Arrogant, CORRUPT Imbecile. He can end this anytime. Just defund Obamacare, and grant every American the same exemptions Obama gave his large corporate contributors. Obama and the democrats can forget about funding Obamacare. They can forget about raising the debt ceiling UNLESS they agree to $2 in spending cuts for every $1 in debt ceiling increase. This is non-negotiable. Two can play the Presidents "I will not negotiate card"...
The speaker should not even agree to meet with Reid or Obama again UNLESS they concede both points. Otherwise they should prepare for this to drag on months and maybe years.
The only person to blame in this is the moron '57 states'.
Every year this guy has been in the White House things have gotten worse and worse, he needs to go
This was just down right irresponsible! The President is like a little kid throwing a fit! It's really quite disturbing to see how he's trying to make Americans suffer. I wonder how the Democratic Senate can put up with this guy, are they afraid of him and Harry Reid? This isn't how you run a country, these guys are drunk with power.
exrepublican which is nothing but typical left wing lying he is NOT never WAS! brainwashed dope!
Obama has broken so many laws that he swore to uphold! Obamacare is single payer deathcare!
now people see it! HE'S A COMPLETE FAILURE! OBAMACARE WILL DESTROY THIS COUNTRY!
THE ECONOMY IS IN SHAMBLES AND HE CONTINUES TO PUSH HIS LEFT WING SOCIALIST
AGENDA WITH HELP OF THE LEFT WING BIAS MEDIA! BUT PEOPLE ARE GETTING FED UP
WITH HIM AND THE REPUBLICANS BETTER KEEP FIGHTING LIKE THEY ARE NOW! OBAMA
AND DEMONCRATS WILL LOSE BIG IN NEXT ELECTION! GOODBYE OBAMA AND DEMOS!
He wants to Destroy our Economy. This way we will be in That ONE WORLD ORDER, That the Clinton's, The Bushes, and Obama wants.
Wake up America. It's coming. Right around the Corner.
DESTROYED FROM WITH-IN.
Bob who, My wife just got her Premium From BC&BS and it went from $345.00 to $750.00 She gets $950. after Taxes from Social Security,
Now with the increase she will be getting about, $200.00 a Month.
Thank The Liberals, Roosevelt started it, Johnson started to use it for Welfare, Jimmy Carter started to give it to Immigrants,( Cuban Boat People) and than Clinton started to Tax it. Taxing a Tax.
How come you always hear about them fixing Social Security , BUT You never hear them talk about MEDICAID. That is a FREE BEE.
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