Dow drop in Washington’s plan?

DC wants Dow to drop 1,000: Bove

Published: Monday, 14 Oct 2013 | CNBC

Financial analyst Dick Bove thinks gridlocked politicians are asking for a market sell-off.

“What do they think will convince the American public that they as our leaders must act? It is becoming very clear that what they want is panic in the equity markets. They want to see the Dow drop 1,000 points,” Bove wrote in a note to Rafferty Capital Markets clients Monday.

“An event of this nature would be blasted around the world by the media and it would constitute a threat that all Americans could understand. Once the public’s attention was obtained and focused, Congress and the President would act to resolve the current issues.”

Bove urged investor caution.

“The message to shareholders is ‘Watch Out!’ Buying shares at the present bravely arguing that this crisis will pass without harm to anyone is not a good strategy,” he said. “The only good strategy at the moment is to get out of the way. The politicians will get the panic they seek.”

Bove’s comments echo those made to CNBC recently following President Barack Obama’s interview with John Harwood.

“They feel that a severe market sell-off 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.”


Related: Wall Street wonders if Obama wants a selloff

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.

The politics of fear.

13 comments on “Dow drop in Washington’s plan?

  1. Mrs. AL says:

    Run! Hide! Pull the covers over your head! The sky is falling!
    Pine cones.


    • bullright says:

      Yep, Mrs AL funny, what is odd is the network pokes fun at the guy for saying this. But CNBC are alarmists all over the possible ””default'” and keep stoking it. (complete with SNL-type skits) Hard to call someone an alarmist when they are doing it themselves.systematically.


  2. Sbyvl says:

    I wouldn’t be surprised if the Democrats wanted the market to tank. That would be a huge help for them in the next election….


  3. Sbyvl says:

    Perhaps it was to let them know that the WH planned to use quantitative easing to solve the debt problem (a real possibility). Either way it doesn’t matter. There will be no default, but it would actually be a good thing if we hit the debt limit.


  4. tannngl says:

    Me thinks in order to cause a panic they would have to have the fed stop printing money! Otherwise the market will remain fairly stable. Even if Soros tries to manipulate it. The banks have all that money and the only place they can make anything is in stocks.


    • bullright says:

      Right, it may not be worth much but they’ll have plenty of it. That’s true, steady as she can. Still may not be a bad thing if people eased off a little, supposedly some disappointing earnings to come, but the bankers won’t. Or, try this: they might shove even more bucks into oil, ha ha.


      • tannngl says:

        Easing off is what we’ve done. When the drop comes it will be ghastly. Although the new fed chairwoman says quantitative easing should NEVER be stopped!
        It sure is the hedge trading that has made the oil stocks so high. I don’t understand the markets fully but some of this kind of trading shouldn’t be allowed. I think.


        • bullright says:

          We never know for sure what to expect. Everyone seems to have lost enough that who afford to take many chances. The oil gets me po’d. For what, is it like this? I’m almost as tired of all the excuses, It’s not normal.



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