President Obama took to the podium today to discuss the status of Congress’ efforts to avert the self-created crisis known as the fiscal cliff. Unsurprisingly, he confirmed that there will be no grand bargain – that is, they aren’t going to attempt to deal with either long term spending or the debt ceiling in this package. Far from being the last installment of Congressional gridlock over a manufactured crisis, it seems almost certain now that we’re going to be rerunning this drama again in the coming years (especially if the polarization of Congress continues as it has recently).
But Obama did sound positive that a deal on taxes had been reached to let rates rise for higher-income Americans while keeping them flat for everyone else (in turn sending stocks higher and bonds lower) After Boehner made it clear that the Republicans would accept an increase in the tax rate, it essentially became a question not of if, but of how much. Business Insider has a breakdown on how that tax deal is shaping up.
The sequestration still needs to be taken care of, and on this Obama implied that there’s still a fair bit of work to be done. Deciding what to cut and how much was always going to be tough – few things enrage voters as much as seeing their favorite social programs slashed. But it appears that, with no more time to kick the can down the road, the threat of the cliff has finally elicited some action from Congress. Perhaps we’ll find out exactly what that means before the night is over.
Tonight when revelers are counting down from ten, it might not be a part of their New Year festivities – they may be counting the seconds until Congress finalizes the details of the fiscal cliff deal.
The real question for managed futures is what happens when the hangover cures and markets get back to business on Jan 2nd. A failure to reach a deal and big sell off would be just what the doctor ordered for the asset class, which will put in its third losing year in the past 4 after closing out 2012 today. Here’s to better times (for managed futures) ahead.
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