President Obama's Trillion-Dollar Turd may be going over well with Democrats and their liberal cheering section, but the people who create jobs by investing in our future hate it. The market sold off almost 400 points yesterday after tax cheat and Treasury Secretary Tim Geithner tried to pull a Geraldo Rivera - treating the economic package like Al Capone's vault, he opened it up to Wall Street...and there was nothing there.
Here's 5 reasons the market hates this package, from CNBC.
1. There Really is No 'Change'
"I'm really underwhelmed by the plan," says David Twibell, president of wealth management for Colorado Capital Bank in Denver. "Maybe there's not much that can be done right now other than let this work itself out."
2. A Far Cry From Finished
If the administration was purposely setting out a general plan with the specifics to be crafted by Wall Street, then it may have accomplished something.
With so many details left unsolved, much more work will have to be done, again creating uncertainty for investors.
3. Treasury Bubble Still Popping
While Treasurys rallied Tuesday on a further flight to safety, government debt prices are likely to fall as more and more supply comes on line while the government finances the bank rescue.
4. Money Will Stay on the Sidelines
With the government unable to stem the tide of uncertainty bedeviling stocks, convincing people to buy will prove all the more difficult.
"The poor reception afforded to Mr. Geithner's speech in which little was revealed reminded investors that more turbulent times may be ahead without some sense of resolution to the health of the banks' balance sheets," Andrew Wilkinson, senior strategist at Interactive Brokers, wrote in a research note to clients.
5. One Hope: 'Buying Begets Buying'
The one bit of solace from the post-Geithner selloff Tuesday was that you could have set your watch by it.
As news spread last week that a rescue plan was in the making, the markets jumped. When the actual plan was unveiled, the market jumped back. Buy-the-rumor and sell-the-news has been one of the few constants in a stunningly volatile market, and the continuing of the trend raised hopes that the selloff Tuesday would be a one-off event.
"This is a trader's selloff, 100 percent pure and simple," Cohn says. "When (the Dow) gets back to 7,900, 7,850, buyers come back. It's nothing."
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