Down we go, but not for long!
by Peter Switzer
Wall Street headed down overnight and it was put down to the shenanigans of President Barack Obama, and Republican John Boehner, who heads up the negotiations for the GOP — the Grand Old Party.
Well, we have a grand old political stalemate in the making but I still suspect that good sense will win through, though there will be brinksmanship and bluffing, which is what is going on now.
The Dow lost 98.99 points or 0.74 per cent to 13,251.97 while the S&P 500 index lost 10.98 points or 0.76 per cent to finish at 1435.81.
Not surprisingly, the VIX or fear index popped up above 17 but uncertainty will do that.
President Obama has said the two sides are only $200 billion apart, which tells me that a deal will get done before the deadline of December 31 but the market would love it before Christmas Day.
That said, I think a sell-off could happen when the deal is done — markets often buy on the rumour and sell on the fact. I would be a buyer into any such sell-off.
Hovering in the background for all of this are the ratings agencies, which could throw a spanner in the works by giving a dud plan a big thumbs down.
That could hurt the market, but I would buy on that too as a weak plan will mean more growth and better stock prices.
I want the Yanks to get more responsible in two years time when their economy is growing stronger, unemployment is lower and the housing recovery is stronger.
Also Europe would be in better shape and adding more demand to the world economy.
The drama plays on in Washington and I’m hoping for a fiscal cliff solution before Christmas as it will ensure better US economic growth in 2013, which will be great for stocks.
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Published on: Thursday, December 20, 2012
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