I'm hesitant to broach a topic that "smacks" of politics on this thread because clearly some have difficulty in restraining themselves. Nevertheless with the election only a month away, its influence is already "being felt". An example is the amount of "market pain" required to trigger what you might call an inter-meeting half point Greenspan put. IMO the amount of pain is higher right before an election simply because Greenspan does not want to be seen as "interfering". Thus somewhat ironically one of the first of the election effects to be felt is an increase in the probability of restraint by the FED to "come to the rescue" and prematurely abort a plunge. Will the FED act at all? Again IMO, surely, if "things get bad enough". It's just that the threshold is different.
Hence if Max Pain proscribes some limits on "where things will be" thru Oct 18th and after the election the FED's hands aren't even loosely tied, the most dangerous time for a serious plunge is the two weeks between the two events. As we all know those two weeks are a time of the year when people will be jittery. If the possibility of inducing a panic exists, won't someone at least try? Will a serious attempt to induce a panic succeed?
While the first question is rhetorical the second one isn't. Everyone has their own opinion. FWIW mine is that the probabilities are about the same as for starting a fire on a brushy chapperrel hillside in those same two weeks - i.e. it might not happen , but you shouldn't be surprised.
JMO
lurqer
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