Business News

Could US pollies be sensible?

| More

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.

Latest news

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!

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Watch more from Peter on SWITZER TV.

Published on: Wednesday, December 19, 2012

The Switzer Super Report is a newsletter and website for self managed super funds. With exclusive commentary from Peter Switzer and Paul Rickard the Switzer Super Report will help you maximise your after tax investment returns and grow your DIY Super. Click here for a free trial or subscribe today.

Why Aussie stocks lag Wall Street

Kill QE, kill rally? Nope!

Dow to reach 20,000 – can you believe it?

It’s not All Too Hard, it’s More Joyous!

Abbott deserves a Tony Award for that speech!