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Done Deal?

December 14, 2012 – 6:00 pm

111As everyone wrings their hands over the ‘Fiscal Cliff’, talks in Washington seem to be taking the path expected i.e. both sides standing firm with only tiny signs of compromise resulting in delay after delay in getting the deal done. The market feels comfortable with this process. Stock prices for December are up, though up is a relative term. In this case up means that the indexes are higher today than they were on the first day of the month.

Obviously, investors and traders see a deal being done. They may not like the details of the deal when they come out but a deal is in the works. The stock market has always been a good predictor of important economic and political events but it is not good at the exact timing. From observing the foibles of Washington over the years I can tell you the deal will happen only after the politicians wring out every ounce of drama they can. January seems a likely time for a deal to finally be brokered with both sides claiming victory.

For us, the ones that foot the bill for all things political, it means higher taxes and even though tax rates on the so called rich are likely the only rates that will go up don’t you believe that the cost will not spread to everyone. Somewhere we all will be paying more.

As I have expressed many times, the market likes certainty and the fiscal cliff deal will provide a modicum of what it wants and that should translate into a better stock market. At least for a while.

Good Trading
Steve Peasley

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