With visions of sugarplums in their heads, investors will most likely take a break this week awaiting our government to miraculously agree on some sort of compromise. While there have been miracles on this day we don’t expect another one.

We are starting to truly believe that the White House wants no decision and is ok with the US falling off this Fiscal Cliff. We can see the reasoning behind this logic: No compromise, easier to get what you want done early next year. Ever the cynics, we will continue to believe that nothing will happen and both sides will blame each other. Politicians never change.

This will truly be a short week and because of the lack of participants we expect the possibility of some fairly volatile days. The data points are Case-Shiller HPI on Wednesday and Consumer Confidence on Thursday. We still expect data to continue to improve slowly and forward-looking numbers will show growth but most estimates have been lowered due to the uncertainty regarding the Fiscal Cliff.

We continue to believe this is not a great strategy. Next week we will have our year-end review and what to expect in the coming year.

Merry Christmas