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FROM ＢＡＲＲＯＮ＇Ｓ：Maybe the Market Just Doesn’t Care About the Fiscal Cliff
Over the past few days, I’ve been pointing to evidence that for the stock market at least the so-called Fiscal Cliff isn’t as big a deal as much of the media coverage suggests.
The Vix isn’t going crazy, and investor sentiment is improving — not to mention that stocks (SPY) (DIA) are trundling along; even when reporters say Fiscal Cliff talks are moving the market, it’s not more than by fractions of percentages.
Add it all up, and one wonders why there’s a disparity between the frenzied talk and lack of frenzied action — maybe the dearth of IPOs and M&A deals is giving the financial media too much time to ponder the Cliff; perhaps we’re seeing the old adage ‘bad news sells’ at work.
It could just be that, like the Y2K scare in late 1999, there is some danger but most people have decided it’ll work itself out in the end. A great piece by Neil Irwin in yesterday’s Washington Post (via Kevin Drum) that makes just this point:
One [idea] is that all the tough talk from the negotiators is mere posturing, nothing more than a signal to their allies that they are taking a stand in advance of real dealmaking closer to the deadline. Investors and executives have repeatedly seen brinkmanship out of Washington — including over raising the cap on government borrowing in the summer of 2011 — conclude with an agreement at the last possible moment.
And indeed, both sides in the negotiations have been sending private signals to business leaders that a solution will be found.
Irwin also argues going ‘over the cliff’ isn’t the be-all-and-end-all it sounds. Because, really, it’s not a cliff. If a deal between President Obama and Congressional Republicans, isn’t reached until weeks into 2013, the impact will likely be negligible.
The markets could go into full panic mode near year’s end if there’s still no deal. But given the evidence of recent weeks it’s not crazy to think they won’t.作者: not4weak 时间: 2012-12-31 14:25
