Going Off The Cliff, But…

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[Chart courtesy of MarketWatch.com]

It was another day marked by confusion, last minute agreements that a fiscal cliff deal had been reached only to be followed by announcements that nothing had been finalized, but talks were still going on, etc., etc. It was insanity at its finest…

In the end, hope prevailed that a deal is still possible, which pushed the major indexes higher into the close. But, we are going off the fiscal cliff anyway at the end of this day when 2012 ends.

However, there is always that chance that some kind of agreement could be still emerging in early January and, if all parties agree, made retroactive to 1/1/13. I won’t hold my breath for that one, but market behavior tells us that this will be so. Given that, what could possibly go wrong?

Whatever the possible budget deal will be, from what I have read, some taxes will go up but the consensus is that the mandatory cuts may very well be postponed to some nebulous day in the future. Go figure…

That means that the fiscal cliff battle may not be over, as I had hoped, but may be with us in the New Year as well. So far, the market indexes saw nothing but positives in today’s development, and we will have to wait and see how they react to either no deal in early January or a severely watered down deal that does not address the crucial issues of overspending.

In the meantime, I wish you a very happy New Year.

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