Does The White House Have The Magic Touch?

Unusual times call for unusual measures. Business Insider reported that the White House has announced a cancellation of all public events. The Federal Reserve is set to meet today to discuss its policy, and many are hoping or expecting for the Fed to do something to stimulate the economy, perhaps another mention of quantitative easing. The White House has been severely criticized for showing a lack of leadership as the economy has essentially gone from a slowdown to near depression level hysteria in just two weeks. The Dow has fallen over 1,600 points, and although we are seeing a small bounce back this morning, this is nothing more than just hope and prayer for QE3. Since Standard & Poor's downgraded U.S. debt, Obama, Congress, and the rest of Washington has come under tremendous scrutiny. So why cancel all public events today? Perhaps the White House is going to announce some kind of fiscal program to jump start the economy, but it seems more likely that perhaps Congress will be called back from summer recess to get something done to spur economic growth. The July jobs report was much better than expected, but this country needs almost 100,000 more jobs per month just to keep up with population growth. We are not even close to being out of the woods on this. While there is probably no appetite for fiscal stimulus from Washington, there are plenty of packages in Congress that could create jobs and spur economic growth, such as trade agreements with foreign countries. These are not going to add to the deficit, and could help the economy regain firmer footing, instead of feeling like we falling off a cliff again. While this is different then 2008, when everything just halted, it certainly has that 2008 feel to it, as it was just a few short years ago. Panic is starting to be seen on social media, from Facebook, to Twitter, to the mainstream news. People are getting scared again, and when people get scared, spending slows to a halt. Aside from trade agreements, there is not much else the White House can do to spur economic growth, with no appetite for fiscal stimulus. With our debt already having been downgraded by one of the major rating agencies, the likelihood for any kind of stimulus is next to nil. If the White House does not have an ace up its sleeve, it is going to be a long 18 months for President Obama and his team. Maybe instead of looking to Wall Street for answers, they should look to David Copperfield or Harry Houdini for help. ACTION ITEMS:

Bullish:
Traders who believe that the white House has something that will spur the economy might want to consider the following trades:

• Look at infrastructure stocks, like Caterpillar CAT, Deere DE and Granite Construction Inc. GVA, as the only kind of appetite could be for infrastructure plans. Otherwise, it is more likely to be trade agreements.

Bearish:
Traders who believe that the White House can not pull a rabbit out of its sleeve may consider alternate positions:

• Start studying to become the next great magician. If the White House can not perform any tricks, they will surely be looking for someone who can.
  
  

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