So I remember the last balanced budget and what it did for stocks

BY ANDREW GIOVINAZZI

March 5, 2025

Yo Pit Crazies,

Mind you times were different back then. Congress provided some value and SPX was below 500 but still, the stock and option market traded and I was but a new lad to the scene as a market maker.

Stocks were in the basement. SPX might have been close to 400 and VIX did not exist. Stocks did trade so a daily system like Voz’s SPY Zones might have worked, 22% and 175% this week, but there were no daily and weekly options until expiration week. We just had 4 cycles and some LEAPS and that melted the bandwidth at the Cboe and P-Coast exchanges anyway.

But we did trade and 1992-1993 was pretty bleak. Then thankfully, VP Al Gore invented the internet, or maybe that was Marc Andreseen with Mosaic but things got interesting. But it was dark for 2 years from 1991 to 1993.

President Bill Clinton got lit up during the midterm elections and Rep Newt Gingrich swept into power in the House of Representatives. Stalemate in Congress and chaos in the markets as spending was slashed after early tax increases that cost Bill the midterms.

Then something crazy happened when the White House and Congress worked together to balance the budget and cut spending.

Does that sound familiar to you right now?

We had the greatest bull market in history.

Bill Clinton skated as the bull came to a peak in Feb 2001 but no one would begrudge him the rally. Bill and Newt held the line on spending and economic growth poured through on the massive takeup and adoption of the internet to change peoples lives. The USGov was so stable from 1994 to 2001 that I don’t remember ever looking at what the Fed did because they did not need to do anything.

In the USA, US Fiscal health creates economic stability and investors spend on new tech and take risks. If the US Gov is going to go broke, investors don’t spend. If US Gov policy is unclear, they don’t spend. If Congress and the WH can agree on rational spending policy, that is a recipe for long term capital gains in stocks. AI is the big driver for growth in 2025. We just need the US Gov to go along. Interest rates were much higher back then.

Right now things are uncertain but they will not always be like that. We set up several ideas in Trading Desk. We closed part of Tuesday and will look to close more tomorrow. Look for stock you want to own today and put out crazy lower prices to buy them. Like 1992, you might get prices that will astound you.

To Your Trading Success,