This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

The Best of Kass

Stocks in this article: F

Again, the 2012 election was a win for the moderates. Compromise and agreement between the two parties remains my baseline expectation.

I expect the final fiscal compromise will produce only about a 1% fiscal drag in 2013, which will easily be overcome by a better-than-expected housing recovery and by improved business confidence, hirings and business fixed investment spending.

Geithner's Proposal Gets the Silent Treatment

The market's resilience in the face of early legislative posturing appears to be sending a strong message that the fiscal cliff will be resolved in a timely fashion by year-end.

Case in point: Yesterday Treasury Secretary Geithner (representing the Obama administration) delivered a one-sided proposal to the Republicans. His proposal offered $1.6 trillion in tax increases and only $400 billion of unspecified (and non-guaranteed) entitlement program cuts over the next 10 years. The 4-to-1 ratio of tax increases to spending cuts was a partisan and unbalanced proposal, far more lopsided than the tentative agreement made between the President and the Speaker of the House in 2011 and imbalanced relative to the Simpson-Bowles proposal (which had more in spending cuts relative to tax increases).

Upon release of this one-sided proposal, the market's reaction was muted, with S&P futures dropping by only 4 handles. (Since Thursday's 5:00 p.m. EST announcement, the modest falloff in futures has been reversed, and S&P futures are now up by three handles.)

Why didn't the market collapse upon receipt of the administration's proposal?

The answer is quite simple: The market recognizes that Tim Geithner delivered only the first proposal from the Democrats at the beginning of negotiations. The administration has absolutely no intention to stick to the proposal -- if it did, the House would soundly vote down the proposal and the full extent of the fiscal cliff's drag would be felt in the first half of 2013 (causing a recession and a sharp stock market fall).

The muted market reaction to the one-sided Geithner proposal makes sense to me.

Mind Your Investments, and Ignore the Media

There is little question that the schism between the parties is more venal than it was 20-25 years ago, which has led to the politics of division over the last decade.

3 of 4

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,949.55 +144.75 0.81%
S&P 500 2,077.32 +6.67 0.32%
NASDAQ 4,779.3790 +13.9990 0.29%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs