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Investors who fled in fear over potential tax increases from the fiscal cliff have barely broken...

Investors who fled in fear over potential tax increases from the fiscal cliff have barely broken a sweat over spending cuts only two weeks away, as no one wants to sell again on an armageddon story only to watch stocks climb to new highs. But investors expecting a deal may underestimate the potential impact; with some seeking an excuse to sell after the run-up, failure to reach a deal is "by a long stretch" the top candidate to prompt a real pullback.
Comments (27)
  • bbro
    , contributor
    Comments (9164) | Send Message
     
    Sequester cuts will take .5% off of GDP growth this year....off of nominal GDP growth
    16 Feb 2013, 08:38 AM Reply Like
  • Teutonic Knight
    , contributor
    Comments (1988) | Send Message
     
    Congress had been 'dealing' itself into this $16.5T hole. More deals? Beg for the can from the Chinese and kicking that can down more? This nickel and dime country is at the end of its wits.
    16 Feb 2013, 09:12 AM Reply Like
  • Herr Hansa
    , contributor
    Comments (3079) | Send Message
     
    I expect more can kicking, and another few months deal made so they get more time to "negotiate". Meanwhile Moody's and Fitch will not sit still and leave the AAA alone for long. I would expect a downgrade on US credit worthiness before the end of 2013. However, with the Federal Reserve continuing to buy US Treasuries, the immediate impact on yields will be small. I do think I downgrade would cause a correction, but then money dropping out of helicopters will lift equities markets back up.
    16 Feb 2013, 03:34 PM Reply Like
  • wmateri
    , contributor
    Comments (498) | Send Message
     
    Maybe Moody's and Fitch would downgrade the US credit (as they should) if it weren't for the threat of massive state-backed lawsuits threatening them as for S&P. Surely this is the most egregious form of coercion one has ever seen by a state desperate not to have anything upset the current applecart.
    16 Feb 2013, 05:44 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4002) | Send Message
     
    Careful there, comments like that could land you on the drone kill list.
    16 Feb 2013, 06:06 PM Reply Like
  • Teutonic Knight
    , contributor
    Comments (1988) | Send Message
     
    Thank you for the warning, The Geoffster!

     

    Just as I said many times in SA, it is all 'Government-Controlled'!

     

    BTW, it would be naive for anyone to think otherwise, wouldn't it?
    16 Feb 2013, 06:17 PM Reply Like
  • 440978
    , contributor
    Comments (159) | Send Message
     
    This is an observation with which I strongly agree. The lawsuit against S&P was a preemptive threat from the U.S. government. They [US officials] know how fragile the markets are at the moment and know that such a move by the rating's agencies would crush a market teetering on the edge. With a global recession intensifying, companies like Wal-mart and Whole Foods, who happen to sell to very different demographics, stating extreme weakness in sales, industrial production contracting, and the list goes on, a rating downgrade would only add to the heavy load that the market is carrying up the mountain peak of all time highs.

     

    There will be a slip up by the end of the month. Those longs that are on the fence are have the doubts sewn into their minds that this so called recovery is really a recession. Once these neutral longs start selling, and bears start short-selling in earnest, and bullish longs capitulate as each dip bought is breached, a crash in equity prices will unfold quickly.
    16 Feb 2013, 07:19 PM Reply Like
  • Neil459
    , contributor
    Comments (2644) | Send Message
     
    Its not the country, its the media. The (read that all) politician's will do what will get them the least grief. The media wants more spending, so we'll get more spending. End of story. Until the people start providing more grief than the media, this will NOT change.
    16 Feb 2013, 09:23 AM Reply Like
  • kmi
    , contributor
    Comments (3967) | Send Message
     
    I haven't even been paying attention to this too much.

     

    Aren't the cuts tied to passing a budget which is tied to whether or not Congresspersons will receive their salaries?

     

    That's how I seem to recall it's set up, and I don't think our honorable members of Congress have any intent of finding themselves in a situation where they won't get their pay...
    16 Feb 2013, 09:32 AM Reply Like
  • Teutonic Knight
    , contributor
    Comments (1988) | Send Message
     
    Yeah, but our activist president is urging yet another gimmicky 'temporary fix' to the cuts.

     

    Is he occupying an incumbent permanent 4-year position or a 30-day renewable temporary position? Reid unveiled a bill for more taxes on the 'rich' to bring in more revenues offsetting the cuts.

     

    Revenues! Sounds like it is a bottomless well!
    16 Feb 2013, 09:42 AM Reply Like
  • moneyTalksBSWalks
    , contributor
    Comments (193) | Send Message
     
    The pay factor is not relevant for many who are independently wealthy. Plus they will likely claim backpay when the budget eventually passes.
    16 Feb 2013, 11:38 AM Reply Like
  • Herr Hansa
    , contributor
    Comments (3079) | Send Message
     
    All each house needs to do is pass their own measure, then they collect their paychecks. Meanwhile their operating budgets are left untouched, so they can continue to pay high salaries to their wives and friends, and continue to pay "expenses". So if the House of Representatives passes a measure, then the Senate passes a different measure, both houses get their paychecks, but a final bill is still stuck in negotiations.
    16 Feb 2013, 03:36 PM Reply Like
  • Mad_Max_A_Million
    , contributor
    Comments (1175) | Send Message
     
    The terms Tax and Spend have been replaced (by edict) with "Revenues and Investment".
    As in: a pant-load of new obamaCare taxes/fees/penalties AKA revenue enhancements and of course Solindra-like investments.
    16 Feb 2013, 03:57 PM Reply Like
  • wmateri
    , contributor
    Comments (498) | Send Message
     
    Notice how all the negotiating is going on outside the view of the media this time, unlike the "fiscal cliff" debates. I guess negotiating in public just caused to much market volatility. That means the final outcome could be more of a surprise than usual. But I bet they kick the can down the road to match the end of May deadline on passing a budget.
    16 Feb 2013, 05:46 PM Reply Like
  • Teutonic Knight
    , contributor
    Comments (1988) | Send Message
     
    The bet is actually 10-0; not even 10-1. Recall the Romney-Obama bet, it was 2-1, 50c to a dollar win for Romney's win.

     

    Just look at the stock market! Go-Go-Go.

     

    Go all in now; DO NOT DELAY and DO NOT BE LEFT BEHIND!

     

    You heard the female Obama sing at the Inagural and at the Super Bowl. The Time is now. It is like the Hadrian Walls, the Hadran Villa, and the Hadrian Reflecting Pond. It is the Obama Era coming on Strong.

     

    Remember, Obama always wins!
    16 Feb 2013, 05:50 PM Reply Like
  • Heinz Doofenshmirtz
    , contributor
    Comments (269) | Send Message
     
    The "cuts" (actually decreases in the rate of growth over the long term) are the existing law of the land passed as part of the debt limit increase in 2011.

     

    For many, the congressional salaries of senators/congressmen are but a small piece of their potential compensation. See the wealth Harry Reid built by "investing well".
    16 Feb 2013, 06:09 PM Reply Like
  • moneyTalksBSWalks
    , contributor
    Comments (193) | Send Message
     
    We the sheeple get Presidents Day off and they take the week off with no solution in sight for the sequester. So we now know how serious this issue is to the monkeys in DC. Perhaps I have offended the monkeys here!
    16 Feb 2013, 11:43 AM Reply Like
  • holydawn
    , contributor
    Comments (124) | Send Message
     
    what, people actually get Monday off? must be nice...
    16 Feb 2013, 01:56 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4002) | Send Message
     
    How will this affect the average welfare mother raising the next generation of gangbangers? Where is the compassion?
    16 Feb 2013, 05:52 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (3424) | Send Message
     
    Welfare checks will most likely get larger. Her gangbanging children will be more successful as they will face a law-abiding general population whose only legal-to-have firearm will be a 5-foot, orange-painted musket.
    16 Feb 2013, 06:13 PM Reply Like
  • Ohrama
    , contributor
    Comments (504) | Send Message
     
    Along with the humor on welfare mothers, I would for a change like to see jokes on the social security and medicare crowd collecting $100 for each $ or less invested.
    17 Feb 2013, 09:39 PM Reply Like
  • Russ Winter
    , contributor
    Comments (647) | Send Message
     
    For the GOP to kick the can this time would be to hand the Democrats a huge political victory and fracture their own Party. This is virtually a September 1939 "Poland moment" for both of these parties. Given the level of obfuscation, bizarre media reporting, magical thinking, and how far apart the situation is, I expect fur to fly in March. Meanwhile the House and Senate voted to take a recess and will not reconvene until Monday, February 25.
    16 Feb 2013, 08:28 PM Reply Like
  • Russ Winter
    , contributor
    Comments (647) | Send Message
     
    "There won't be any easy off-ramps on this one. The days of 11th-hour negotiations are over.'' -Sen. Mitch McConnell, GOP Senate Minority Leader

     

    Increasingly I feel as if I am Alice in Wonderland and have serious concerns about the fifth estate. One has to be a Sherlock Homes to get to the bottom of the sequester story, so little wonder that the wool is being pulled over the eyes of the American people. Thus the online public comments in these news stories don't even seem to even understand the numbers or math being proposed. I am posting this so that others can cross-check how the sequester counterplan from the Senate Democrats is being falsely reported.

     

    I read through about ten news reports on this Senate Democrat counter-proposal in an attempt to get to the bottom of it. In almost all cases this counter-proposal is being portrayed as an "$110 billion cut" with no reference point such as annual. This conveys the impression that it is a legitimate substitute for the $120 billion annual cuts called for in the sequestration. Buried in a few stories was this account suggesting that the defense cuts would be a total of $27.5 billion over ten years (not annually) and mostly at the back end,

     

    "Senate Appropriations Committee Chairwoman Barbara Mikulski (D-Md.) said the defense cuts don't kick in until 2015, after the Afghanistan war ends and they are phased in slowly until 2021. The plan would make defense cuts of about $3 billion in fiscal years 2015 and 2016 and slowly rise to $5 billion in 2021."

     

    This is a press release sent to Huffington Post from "the Senate Democrat aid". This time the language is clear enough that this is nothing more than a proposal to delay the sequester until January 2, 2014 and to start the discussion (at this late day) an offer of $110 billion in revenue adds and spending cuts over 10 years, not on an annual basis.

     

    http://huff.to/XQqOC1
    16 Feb 2013, 08:33 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (3424) | Send Message
     
    "Revenue adds"? Love it. I kicked in 22% of what I (almost literally) slaved for throughout 2012 to the government's "revenue adds". I want someone from the administration to justify to me why I should "add" to their revenues anymore than I already do....

     

    That 22% is just the federal take... Anything I buy in this great state of Tennessee also incurs a 9.25% sales tax... How much of the money that I pay for gas is a government "revenue add"?

     

    I guess what I really want to know is how much of MY money that I work HARD to make is enough for the government?
    16 Feb 2013, 09:09 PM Reply Like
  • Teutonic Knight
    , contributor
    Comments (1988) | Send Message
     
    Don't cut them. They are so cute!

     

    When these poor souls are released from the Voluntary Adult Detention Centers (VADC) and the Voluntary Adult Detention Facilities (VADF), where would they go? It is not like the Soviets in the Stalin Days where they set up those Gulags to house them, you know.

     

    Besides, there would be less spectacle of civil servants and their entourage contractors/rackets to pushing wrongly-procured equipments over cliffs in the countryside at midnights.

     

    Let them continue to contribute to the parasitic end of the economy by nursing kids into so-called Magnet Schools only to be recycled into the government. You should come down here to see their private pre-school Taj Mahal style. Obviously they don't need the Obama pre-school.

     

    BTW, as far as my memory gets me, when I was in Ottawa with that civil service of the Great White North, legends had it that cleaning ladies routinely discovered dead bodies in their cubicles, presumably due to lack of work and ensuing boredom.

     

    Cheers. I bet 10-0 - - -> No cuts. It's another hoax!

     

    P.S. Al Gore in his National Review did cut a couple of term-job typists though.
    16 Feb 2013, 09:20 PM Reply Like
  • Poor Texan
    , contributor
    Comments (3528) | Send Message
     
    "I guess what I really want to know is how much of MY money that I work HARD to make is enough for the government? "

     

    All of it!
    17 Feb 2013, 09:39 PM Reply Like
  • june1234
    , contributor
    Comments (2342) | Send Message
     
    last downgrade sent markets tumbling, sequestration shrinks your GDP Damned if you don't damned if you do. Pick your poison.
    17 Feb 2013, 03:53 AM Reply Like
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