Fiscal Cliff: Wall Street Waits While Washington Waffles

Everybody knew that the politicians in the nation's capitol wouldn't get a deal on taxes and spending until the very last possible minute, right?

That certainly seems to be the case, as there are now only five days left in 2012, and most of congress is out of town, though President Obama has made arrangements to return to the White House from Hawaii on Thursday.

Whether or not there will be anyone for him to negotiate with in another question. And what exactly will they be discussing? A very, very, short term deal, most likely extending unemployment benefits and maybe keeping the Bush tax cuts intact for those earning under $250,000, for maybe a couple of months.

The real problem which is beginning to emerge is the upcoming vote on raising the debt ceiling (again), and the Tea Party Republicans in the house still seem hell-bent on making that an issue by which they can twist the president's arm.

The debt ceiling will need to be raised before March, at the very latest, or the federal government will shut down, which, at this juncture, seems to be the best option. Just do away with all of it and let chaos reign. Why not? The solutions being bantered about by the half-crazed Republicans and Democrats aren't going to solve anything except to dole out a few more Obama bucks to those already with their hands out and keep marginal rates in pretty much the same range without meaningful changes to spending or structural reform to entitlement programs or defense.

Wall Street has displayed iron nerves throughout this entire fiscal fiasco, with stocks up for the month of December. The bankster criminals on the Street are probably in on what already is looking like the biggest tax increase in American history, so they're likely well-positioned to benefit from a market decline.

If they aren't, they soon will be, if that's how this is going to go down.

It's gotten well past ridiculous, especially in light of the report from Mastercard Advisors Spending Pulse today that saw retail sales up just 0.7% versus 2011. The report tracked sales from October 28 to December 24.

Happy Holidays. Not.

Dow 13,114.59, -24.49 (0.19%)
NASDAQ 2,990.16, -22.44 (0.74%)
S&P 500 1,419.83, -6.83 (0.48%)
NYSE Composite 8,395.49, -25.06 (0.30%)
NASDAQ Volume 1,059,561,875
NYSE Volume 2,273,327,500
Combined NYSE & NASDAQ Advance - Decline: 1959-3537
Combined NYSE & NASDAQ New highs - New lows: 96-40
WTI crude oil: 90.98, +2.37
Gold: 1,660.70, +1.20
Silver: 30.04, +0.138

John Boehner's Political Apocalypse; the Secret of Oz

As far as one can tell, the Mayans were incorrect. With less than eight hours left in this winter solstice 21st day of December in the year 2012 (actually, it's already the 22nd in some parts of the world across the international time line), it's a safe bet that planet earth isn't going to meet up with a death star, tilt over on its axis or flip its poles in a magnetic firestorm.

Incidentally, in numerology, today's date is significant. The digits in 12/21/2012 reduce to 11, both a prime number and a master number in numerology, 11 is representative of great spiritual energy and a linking between mortal and immortal states. The Mayans may have been - according to their calendar supposedly ending on this date - predicting the end of an epoch, and the beginning of a great enlightenment.

Whether or not there's even a shred of believability in all of this Mayan "end of world" hysteria, simply the hope for change - to a more peaceful, spiritual existence -should suffice to empower some to good and better achievements.

For those who decry numerology as mere nonsense, one should be apprised that the most popular and widely-employed system was originated by none other than Pythagoras, who knew a bit about numbers, meaning and their relationship to our known existence.

In any case, life goes on unabated, though one could make a case that the evening of the 20th and the day of the 21st marked a personal political apocalypse for one John Boehner, Republican Speaker of the House, when he could not muster enough support from his caucus to pass his proposed Plan B spending and tax proposal last night in the US House of Representatives.

Around 7:30 pm Thursday night, a raucous meeting of the Republicans in the house adjourned with a lack of consensus on the Speaker's proposal and the measure was shelved, much to the dismay of Mr. Boehner, who has gotten nowhere in either negotiations with the president or within his own party.

The tightrope Mr. Boehner has been treading has developed either a knot or a twang, depending on one's own political outlook. In any case, Boehner's future as Speaker appears to be as much in doubt as his ability to harness his members to an agreement with the president on avoiding the fiscal cliff, the deadline for a solution now a mere ten days away.

So, while the world may not have ended today, in John Boehner's insular little world of Washington politics, it may seem like the end of the political road. That's how apocalypse usually works: bad for some, but not for all.

When the news hit that the Plan B measure would not come up for a vote in the House, along with a telling smirk on the face of Eric Cantor, the Marcus Junius Brutus to Boehner's status as Julius Caesar, futures took a nose-dive, Dow futures plummeting to more than -200 in a matter of minutes.

Cantor, incidentally, the House Majority Leader, has eyes on the Speaker's office, and while modern day politics may be more civilized than what took place in Roman forums, political assassinations can be easily more painful than actual ones. The knife is turned more slowly in the modern world.

Markets were not pleased when they opened this morning, though after the initial selloff, the decline was very limited, with stocks trading in a tight lower range throughout the day. There was little of the expected quadruple-witching volatility after the initial thrust lower, probably something to be expected with the algo-crunching computers in charge of the bulk of trading.

While volume was elevated, it was not outstanding and the end results of the trading day were hardly cognizant of the turmoil on Capitol Hill. Wall Street still appears to be holding out hope for a happy ending to 2012 and a solution to the nation's fiscal issues. Good luck with that.

As this week comes to a melodramatic close, Monday will be a half day, with markets closing at 1:00 pm ET. Money daily will not post on that day, taking some needed time off for the holiday, unless there is some event worthy of memorializing.

One bit of business to attend to is contained in the video posted below, the exceptional, award-winning documentary exposing the secrets of L. Frank Baum's "The Wizard of Oz," which, though a best-selling children's book, years later adapted for the big screen starring July Garland as Dorothy, the story was a scathing riposte of the banking system and a searing critique of the frailty of government.

Well worth the viewing time, if you do nothing else at all to educate yourself on the truth about fractional reserve banking and politics, this is must viewing.



Happy Holidays, and Merry Christmas to all, and to all a good night!

Dow 13,190.84, -120.88 (0.91%)
NASDAQ 3,021.01, -29.38 (0.96%)
S&P 500 1,430.15, -13.54 (0.94%)
NYSE Composite 8,443.15, -73.28 (0.86%)
NASDAQ Volume 2,825,451,750
NYSE Volume 4,834,776,000
Combined NYSE & NASDAQ Advance - Decline: 1823-3704
Combined NYSE & NASDAQ New highs - New lows: 118-45
WTI crude oil: 88.66, -1.47
Gold: 1,660.10, +14.20
Silver: 30.20, +0.525

TEOTWAWKI, but, Stocks Gain on Boehner's Plan B

Since, according to myths and Mayan calendars, the world is supposed to end tomorrow, this will be a short post, because most people have better things to do to prepare for annihilation than read about stocks, bonds and commodities.

Apparently, Wall Street traders aren't buying the hype - but, they still believe the Republicans and Democrats in Washington will work out a deal before January 1, 2013, because they keep buying stock.

The joke will be on them if the world ends tomorrow, because all that trading they've done will not have done them any good. The upside for the world ending on December 21 is that anyone who hasn't done their Christmas shopping until now will have saved a bundle. Also, the end of the world kind of puts the kibosh on the Zombie Apocalypse. No world, no zombies... or maybe this would be the kickoff party.

The biggest event of today was John Boehner pushing ahead with "Plan B" which would keep the Bush tax cuts intact for anyone earning less than $1 million a year. Traders apparently were happy with that prospect, as a little rally ensued after Boehner spoke, never mind that Harry Reid said the House bill was already a dead issue in the Senate.

If there's no tomorrow, then this would be good-bye, but, just in case those crafty Mayans were wrong, we'll be back tomorrow. Darn, everybody will have to go to work on Friday.

Dow 13,311.72, +59.75 (0.45%)
NASDAQ 3,050.39, +6.03 (0.20%)
S&P 500 1,443.69, +7.88 (0.55%)
NYSE Composite 8,516.43, +52.61 (0.62%)
NASDAQ Volume 1,685,494,500.00
NYSE Volume 3,656,370,750
Combined NYSE & NASDAQ Advance - Decline: 3574-1921
Combined NYSE & NASDAQ New highs - New lows: 250-32
WTI crude oil: 90.13, +0.15
Gold: 1,645.90, -21.80
Silver: 29.68, -1.438

Tip-toeing Along the Edge of the Fiscal Cliff (a melodrama)

This fiscal cliff nonsense is getting a little thick.

Just yesterday, it appeared that the president and John Boehner were coming together on a deal. Today, Boehner steps up to a mic in the Capitol and blurts out something about the president needing to get serious, which is exactly what he said two weeks ago.

Money Daily continues to cling to its creepy, cynical prediction that there will be no deal, never was going to be one, because the parties had already agreed to raise taxes on everybody (why not?) and blame each other.

At this point, all signals should be indicating that there will be no deal prior to the official deadline of midnight on December 31, and beginning with the first tick of the clock in 2013, we begin to slowly dip over the cliff.

The effect of going over the cliff will not be a sudden, recognizable event, but rather a series of widely distributed government outreaches directed straight at the wallets of American citizens. It's a horrible policy decision, but, seriously, could we have expected less from this particular gang of clowns.

Regular wage earners will be hardest hit, as both regular income tax rates will increase, but the government will put pack the 1/3 of the trust fund deductions (SSI) that they so generously didn't deduct from everyone's paychecks in 2012, which was part of last year.

This inconsistency in tax policy, government bickering and annual changes in rates, deductions, spending cuts and increases, et. al., is not anything any stable nation would entertain, the USA having proven to be anything other than stable the past four or five or twelve years as concerns fiscal and monetary policy, though the FED has been trying (ZIRP and QE1, 2, 3, infinity, 4, and likely, beyond... yessh, good luck).

Congress will be departing for the holidays en masse tomorrow and Friday, so who really among us still believes anybody in the Capitol is serious about making a deal, finding common ground (remember that quaint concept of "common good?") and relieving the American people from so much uncertainty, doubt and outright confusion.

These are questionable times with a questionable cast of characters, something along the line of the soap operas, but without doctors who return from the dead or schmaltzy, scheming middle-aged marionettes living in some alternate universe, even though Washington seems to be spinning in an orbit all its own.

So, if there's no deal by tomorrow, because the individual members in the congress have to read whatever bill is presented, no? And then they have to vote on it, pass it or turn it down. If its passed, the President's signature is a quick finish and on to more misadventures.

Whether the congress and the president agree to anything before New Year's Eve becomes New Year's Day is probably immaterial at this point. If they miss any deadlines, they'll just claim the law to be retroactive and everything will be fine. But a couple of things are virtual slam dunks. Whatever they come up with it will not be enough to revive the economy, which, after all, is the point of this exercise. Also, somebody's - and possibly everybody's - taxes will be going up and some government programs will not be funded or appropriated for as generously as before.

The Dow was off nearly 100 points today, which isn't much, in light of recent moves higher. A deal on the fiscal cliff has been priced into stocks. Today's action was a little bit of recognition that all may not be well in deal-land.

Denial. It's what's for New Year.

Dow 13,251.97, -98.99 (0.74%)
NASDAQ 3,044.36, -10.17 (0.33%)
S&P 500 1,435.81, -10.98 (0.76%)
NYSE Composite 8,463.82, -35.53 (0.42%)
NASDAQ Volume 1,938,485,625
NYSE Volume 3,838,595,000
Combined NYSE & NASDAQ Advance - Decline: 2752-2748
Combined NYSE & NASDAQ New highs - New lows: 278-39
WTI crude oil: 89.51, +1.58
Gold: 1,667.70, -3.00
Silver: 31.12, -0.553

Boehner, Obama Closer on Fiscal Cliff Negotiations, Prompting Exultant Wall Street Rally

In a piece of somewhat shocking news, considering the participants are both career politicians of the highest grade, it appeared today that President Obama and House Speaker, John Boehner, were getting much closer to reaching a compromise to end the fears of going over the fiscal cliff on January 1, 2013.

Essentially, Boehner has agreed to some tax cuts for wealthier individuals while Obama is making headway in spending cuts, bringing the two sides closer to an agreement that would, at the very least, provide a level of certainty about tax and spending policies for the near future.

While the roughly $1 trillion in tax increases and another $1 trillion in spending cuts is phased over 10 years, it represents some easing of the tense gridlock between the two parties that have plagued Washington for years.

Compromise being the key to negotiation on these issues, it appears both sides are ready to give a little as the December 31 deadline approaches.

Cynics might say that the politicians are closing in on a deal only because their party members don't want to stay in Washington or have to return to the capitol between Christmas and New Year to hammer out details of a deal.

Most indications are that the President and the Speaker are within a few hundred billion dollars of each other's targets and a bill could be brought to the House and Senate by Thursday, allowing time for votes, a few minor changes and all escaping back to their districts (and families) in plenty of time for the holidays.

What was for certain was Wall Street's enthusiastic response, sending stocks sharply higher on strong volume. The rally - despite fears stemming from the fiscal debate - over the past four-and-a-half weeks has been nothing short of remarkable with the Dow Jones Industrials advancing more than 800 points since the closing low on November 15 (15,542.38) and the S&P tacking on 94 points over the same time span.

Whether or not the politicians arrive at a compromise deal, shorting this market - coincident with the real potential for a blow-off Santa Claus rally - before year's end would not be a wise move right about now.

The Wall Street crowd can best be compared to college kids on Spring Break, where just about anything is ample cause for a party.

Dow 13,350.96, +115.57(0.87%)
NASDAQ 3,054.53, +43.93(1.46%)
S&P 500 1,446.79, +16.43(1.15%)
NYSE Composite 8,499.35, +92.34(1.10%)
NASDAQ Volume 2,017,737,875
NYSE Volume 4,116,356,750
Combined NYSE & NASDAQ Advance - Decline: 4078-1520
Combined NYSE & NASDAQ New highs - New lows: 284-41
WTI crude oil: 87.93, +0.73
Gold: 1,670.70, -27.50
Silver: 31.67, -0.611