EmailWhen a Congressional leader holds a press conference on the fiscal cliff, there should be a five-second censor delay on the broadcast so listeners won't have to hear nonsense like we heard yesterday.
Less than 24 hours after expressing a sense of optimism that a fiscal cliff deal can get done, House Speaker Boehner (or was it his evil twin?) abruptly declared that there has been no substantive progress on the talks between the House and the White House in the last two weeks. He went on to say that the Democrats have yet to get serious about real spending cuts, which he added is a prerequisite for the GOP to agree to revenue increases.
Soon thereafter, Senate Majority Leader Reid (or was it his evil twin?) stepped to his respective podium to say there hasn't been any substantive progress because the Democrats are waiting for a serious offer from the Republicans.
All that was missing from those press conferences were a few wet willies and some atomic wedgies. It was simply a childish exhibition of finger pointing and name calling.
Two things were made clear with yesterday's remarks: (1) the path to a compromise won't be smooth and (2) Senator Reid doesn't understand Congressman Boehner's brain.
Fortunately, the stock market saw through the nonsense. Sure, the S&P 500 got knocked back a bit at first, but it recouped most of the knee-jerk losses by the close and finished up six points, which is close to the gain it was posting before Mr. Boehner started to speak.
In effect, the market's response to the congressional game of "He said, He Said" was fairly muted, which is perhaps what the aforementioned leaders needs to be in public until they have something to announce other than more boilerplate bluster.
Moving on.
Foreign markets took their cue from the resilience of the U.S. market and have registered modest gains.
Europe's positive disposition is interesting given that ECB President Draghi delivered some cautious-sounding remarks on the economic outlook. Furthermore, October retail sales were weaker than expected in Germany, France saw consumer spending dip 0.2%, and the eurozone unemployment rate ticked up to 11.7% from 11.6%.
But, hey, the German parliament approved the latest bailout for Greece. Phew. Real economic problems solved.
The U.S. market is on course for a flattish open despite some weaker than expected data on personal income and spending for October that will weigh on fourth quarter GDP forecasts.
Specifically, personal income was unchanged in October (Briefing.com consensus +0.2%) while personal spending declined 0.2% (Briefing.com consensus +0.1%). Real PCE was down 0.3% as the price index for PCE increased 0.1%.
According to the BEA, Hurricane Sandy reduced wages by roughly $18.0 bln annualized in October. Excluding the effects of the hurricane, income would have risen 0.1%.
It is likely that we will see some rebound in spending in November with pent-up demand being unleashed after the hurricane.
The Chicago PMI report for November (Briefing.com consensus 50.7; prior 49.9) will be released at 9:45 a.m. ET.
We haven't heard of any press conferences about the fiscal cliff being scheduled. However, with a proposal from the White House being floated that includes a request for $50 bln in new spending, you can bet GOP members will be chomping at the bit to say something.
