Senator John McCain (R-AZ) speaks with reporters after voting against the "skinny repeal" health care bill on Capitol Hill in Washington, US, July 28, 2017. Photo: Reuters / Aaron P. Bernstein

The US equity market was stable today after yesterday’s midday air pocket, which took the NASDAQ 100 from just under 6000 at noon to 5845 at 1:40 p.m.

Notably, Asian stocks (the MSCI non-Japan Asia ETF, AAXJ) tracked the major US stock indices tick for tick as they went into momentary free-fall. That probably was the artefact of a malfunctioning algorithm at a wayward hedge fund than a gauge of fundamentals. Nonetheless, it happened to occur just at the moment that the Trump Administration lost control of the Senate.

By midday yesterday it was clear that the Senate would embarrass the White House by passing sanctions against Russia that the president would be powerless to undo. Later in the day, Sen. John McCain would cast a decisive vote against the Administration’s healthcare reform legislation. It was just before the new White House Communications Director Anthony Scaramucci unloaded a series of obscenities against his senior White House colleagues.

The stock market’s swoon and the Administration’s embarrassment probably are unrelated, but the coincidence points to an important consideration: Markets don’t worry about politics until they do. The Senate Republicans are in open revolt and have brought down the president’s health care reform. This can’t be good. It isn’t very bad–yet. But that could change.

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