Could US pollies be sensible?
by Peter Switzer
Wall Street is up again and I’m really glad last week I said, “F the fiscal cliff — I’m buying stocks!”
From what seems to be happening, we might have to concede that US politicians might be behaving sensibly. Who would have thought?
Of course, that nincompoop, Democrat Harry Reid said the Republicans were about to abandon negotiations, but no one believed him.
The Dow ended up 115.57 points or 0.87 per cent to 13,350.96.
Meanwhile the S&P 500 was up a solid 16.43 points or 1.15 per cent to 1446.79.
In an interesting twist, the Republicans’ chief negotiator suggested Americans on $1 million plus a year would lose their Bush tax cuts introduced when the GFC struck, and he opted for deferring any spending cuts.
That’s a huge concession and if accepted would be a shot in the arm for the US economy over 2013. This would also be great for stocks.
Unfortunately the White House rejected the deal on the basis that the $1 million threshold was too high.
President Barack Obama wants those on $400,000 a year to lose the tax cuts, but this is an improvement on his $200,000 cut off that was put forward earlier in the negotiations.
The view is forming that the horse-trading is positive and a deal will get done and that’s why stocks were up again in New York.
Technical charts also point to a share spike provided the US pollies remain sane and sensible.
Keeping it positive
Also keeping it positive was another good homebuilder sentiment reading, which is now up eight months on a trot.
And in a surprise move, Standard & Poor's raised Greece's sovereign credit rating to B-minus, which is a pay off for the support the EU has shown for the country.
If you throw in the much better news out of China, there’s a growing collection of good news stories and with interest rates so low, more and more investors who have been scared to punt on stocks will be drifting back to the stock market. However, Congress has to beat the fiscal cliff!
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Published on: Wednesday, December 19, 2012
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