House Passes Stimulus Bill

          This afternoon, the House of Representatives pass the $825 billion stimulus bill according to CNBC. The bill must now passed the Senate. Changes to the bill can still be made, so nothing is certain at the moment. Democrat expectations are for it to be on President Obama’s desk by mid February for him to sign into law.

          Traders should remember what took place during the TARP bailout bill development and voting. It was a classic case of “buying the rumor, selling the fact”. The market bought into the idea, but when it didn’t pass, the markets sold off, leading to US dollar and Japanese Yen strength. Then later when the bill did pass, the markets sold off once again. Despite all of the hope and desire the market seems to have in the government to save the economy, the market continues to reject government intervention. It appears we are in the “buying the rumor” phase of his bill. Expect some rallies to occur, but ultimately we are expecting further losses in equities and higher yielding currencies as the market “sells the fact”.