Tuesday, July 26 3:40 PM – Mixed Markets, Stalemate in DC, US Credit Rating

Not much to report in market action today.

US and European markets are mixed, Asia had a good day. Oil, food and gold are up; the US dollar is down.

All eyes are on Washington and presently there is a stare-down between the president and John Boehner. Speaker Boehner was told today that his plan as is may not pass even the House. The main problem is the two-step solution, a $1 trillion cut now with a committee to come up with more cuts in January. Most do not want to drag this out that long so he will probably have to change his plan.

The Reid approach counts $1 trillion in savings from drawing down troops in Iraq and Afghanistan but many view that as gimmickry and far from certain to actually be carried out. President Obama wants tax increases on the rich to carry the day. At least he’s consistent.

Someone has to blink in this showdown. We’ll know the answer within a week, for sure.

The ratings agencies have said they want to see $4 trillion in cuts for the US to keep its AAA rating. No one in DC is even proposing that, so a cut in the US credit rating is looking more likely.