Daily Stock Market Commentary
Stocks Soar as Alleged Fiscal cliff “Deal” is “Close”
By Trader Greg – Posted after the market close, Monday, December 31, 2012
Stock prices surged on the last day of the year on the Presidential announcement that a “deal” to avoid the fiscal cliff was “close.”
Today was nothing more than a pre-planned short squeeze with the aid of some very high level politicians to help manage the news flow to support the short squeeze/end-of-the-month/end-of-the-quarter/end-of-the-year window dressing.
I’ve been reporting for two full months that my sources in D.C. have leaked that there would be no deal. For 5 weeks the media has been hyping the “a deal is close” meme. Here’s how it looked on Yahoo Finance today:
Has anyone looked at the calendar? Today is the LAST day of the year. Even by official admission, there is no deal yet. They’ve had months to work out a “deal,” yet on the very last day, all that can be said is that a deal is “close.”
For those that can’t put 1+1 together to come up with 2, we’re going over the fiscal cliff in about 7 hours from now. The House has no plans to, and will NOT be voting on any deal tonight.
At midnight, the automatic tax increases and spending cuts will take effect. That’s the supposed “financial disaster” being described as the “fiscal cliff.”
The entire fiscal cliff meme is nothing but an over-hyped distraction. There are much, much bigger financial problems than several hundred billion dollars in annual spending cuts and tax hikes. The quadrillion (that’s 1,000 trillion) derivatives market absolutely dwarfs the size of not only the “fiscal cliff,” but the entire annual U.S. budget many, many times over.
The bond bubble, which ties in with and is held together by the derivatives monster, is a far more serious threat than the so-called “fiscal cliff.” Worrying about the fiscal cliff is like worrying about your neighbor’s dog trampling your flower garden while your house is on fire.
Despite all the talk of “a deal is close” for the past 5 weeks, there was no deal. At midnight over the cliff we go, and as I am writing this, the Chicago Tribune has just released a story admitting that Congress will not act in time to prevent going over the fiscal cliff.
Quick, look surprised.
Markets are closed tomorrow, but I’ll have a post with my January forecast. Enjoy the festivities tonight.