Plan B Heads Over the Cliff

"Stay with us. Stay the course!"
--Col Harry Burwell (The Patriot)

Last night Speaker John Boehner pulled a planned House vote on 'Plan B', an alternative proposal to the Democrat's plan for averting the so called Fiscal Cliff scheduled to kick in Jan 1. The speaker could not find enough votes from Reps in his own party.

Many of the holdouts are Tea Party types, perhaps 40-50 strong, who remain adamantly opposed to tax hikes of any kind. This is not sitting well with old school Big Government Republicans.

The next few days should be interesting. Unless the Old Guard can whip Tea Party types into submission, then there will either a) be no compromise passed, or b) Big Government Republicans and Democrats will need to co-sponsor a bill that circumvents the Tea Party.

When Plan B's collapse was announced last night, the SPX dropped 50 handles. It quickly recovered about 2/3 of that. This morning, the SPX has been further closing the gap and is currently off only 11 handles. This market either believes a deal (a.k.a. a stimulative bailout) can still be done, or there are 'non-economic' buyers in the market.

position in SPX