Why the rally? And it is a rally, a broad one, with three stocks advancing for each one declining.
My friend Art Cashin, in our daily web interview, called today an "Armistice Rally" since neither House Speaker John Boehner nor Senate Majority Leader Harry Reid nor Senate Minority Leader Mitch McConnell nor President Obama have been on the air since the markets opened (though the President made brief comments midday).
That's true, but trading desks are full of talk that the uproar over the shutdown might increase the odds of a debt ceiling deal. That crazy optimism has been typical of the market's response leading up to the shutdown.
First off, as my friend Greg Valliere has pointed out, Mr. Boehner cannot control his troops; there's no guarantee they would support a deal even if he signed it.
Harry Reid in the Senate has no interest in making a deal, since he believes this is damaging the GOP brand.
But there's a bigger problem: rolling up the continuing resolution and a debt ceiling deal would almost certainly not happen until we got close to the October 17 deadline for the debt ceiling.
Keeping the government shut down for another two weeks? With roughly 0.2 percent getting shaved off of GDP for every week the government stays shut down? That's just plain stupid.
That's why there has been talk that the way to do the Grand Bargain is for everyone to agree to an immediate continuing resolution to keep the government open--for another week or so.
A week? I know, but buying time is what it will take to give a Grand Bargain a chance.
I know, it sounds crazy optimistic, but that is what is being floated around.