INSIGHTS
DEC
3
WEEK AHEAD...
The Fiscal cliff. Enough said. The next two weeks could change the course of the economy for several years to come and there is no clear cut solution to this situation.
As we have said countless times on TV and in print, the last thing we will ever want to do is rely on politicians to do the right thing. They just don’t know how.
We also understand that there really is no easy solution to the Fiscal Cliff. There will be higher taxes come January 1, 2013. The question is where most of that burden will fall. Our guess is that a partial compromise will be reached by year-end and both parties will say it’s a testament to bi-partisianship at its best. When the dust settles, it won’t be any stroke of genius and some portion of these tax hikes will be delayed until next year sometime so as to soften the effect on the economy.
However, higher taxes will have an effect on the economy and they will impact GDP in the second quarter of next year.
This week is loaded with some very important data points and even with the shadow of the Fiscal Cliff and Superstorm Sandy still clouding the numbers we will be watching the PMI Manufacturing Index on Monday as a starting point. This Index is gives a pretty accurate indication of business activity. We think it will come in on the high end of the range and that may set the tone for the week.
The list of other important numbers is as follows: Car sales, ADP Employment report, Jobless claims, Employment Situation and finally Consumer Sentiment.
In a normal December, these economic figures would be rocket fuel for a nice rally to end the year but waiting on a political resolution to a major tax quandary will prevent that rally from igniting.
As we have said countless times on TV and in print, the last thing we will ever want to do is rely on politicians to do the right thing. They just don’t know how.
We also understand that there really is no easy solution to the Fiscal Cliff. There will be higher taxes come January 1, 2013. The question is where most of that burden will fall. Our guess is that a partial compromise will be reached by year-end and both parties will say it’s a testament to bi-partisianship at its best. When the dust settles, it won’t be any stroke of genius and some portion of these tax hikes will be delayed until next year sometime so as to soften the effect on the economy.
However, higher taxes will have an effect on the economy and they will impact GDP in the second quarter of next year.
This week is loaded with some very important data points and even with the shadow of the Fiscal Cliff and Superstorm Sandy still clouding the numbers we will be watching the PMI Manufacturing Index on Monday as a starting point. This Index is gives a pretty accurate indication of business activity. We think it will come in on the high end of the range and that may set the tone for the week.
The list of other important numbers is as follows: Car sales, ADP Employment report, Jobless claims, Employment Situation and finally Consumer Sentiment.
In a normal December, these economic figures would be rocket fuel for a nice rally to end the year but waiting on a political resolution to a major tax quandary will prevent that rally from igniting.