12/13/12 4:30 PM – Fiscal Cliff Negotiations Look to Go Down to the Wire

I hope there is something going on behind closed doors on the Fiscal Cliff negotiations because there is no meaningful progress being reported publicly. Republicans are very frustrated with the idea the president seems to have of what balance means. Apparently, it means tax increases and spending increases.

That is not what Republicans had in mind, nor is it what is needed to re-do a budget reduction accord. The problem is that the stimulus spending the president is proposing costs more than the savings from the cuts in spending. Plus, entitlements, the heart of the problem, are off the table.

The market is not too happy with this. The U.S. markets were down again today after opening higher. The news that the Fed is going to continue its expansionary policies should have been enough the send the market higher but that news is being overwhelmed by the Fiscal Cliff on which there are constant, discouraging updates.

I think this is simple brinksmanship on the president’s part. Don’t look for a deal before Christmas. If that is the case, the next week should be weak overall for the market despite whateve seasonal pluses there are and what the news is on other fronts.

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