Photo: Wikimedia Commons
What’s next for markets?Today they’re going wild.
But Dan Greenhaus at BTIG does a good job laying out the rocky terrain coming next:
The number one question we’ve been receiving is what we think this means for equities. In the short term, it certainly (all else equal) avoids further downside related to a protracted debate. In January, Equities may continue to retrace their post-election losses. More generally though, we would note two things. First, our views as laid out in our 2013 Outlook hold since we assumed a fiscal cliff deal in nearly any outcome so there is very little “new” info in the deal. Secondly, and more problematically, we are set for a series of mini-cliffs. The sequester must be dealt with, the budget has yet to be agreed upon, the debt ceiling debate is yet to come, the farm bill expires and at the end of the year, extended unemployment compensation goes away. Joe Biden will be seen again. In the immediate, how far can equities rally with another debt ceiling debate on the horizon?
So yeah, all kinds of stuff coming up.
But as Greenhaus goes on to note, this is nothing new:
So while we think the path for risk assets is higher in coming months, it will not be without turmoil. But this is nothing new. Equities (and bonds for that matter) have appreciated over each of the last three years but not without policymaker-induced-pullbacks. Spring 2010, summer 2011 and spring/fall 2012 all saw meaningful equity declines of varying amounts. Will 2013 be any different? We doubt it.
So yeah. Tons of newsrisk going on, but really the same old stuff.
Cramer’s tweets from earlier may be apropos:
Photo: Jim Cramer
Anyway, the next big date is March 1, the day when the punted sequester spending cuts are due to kick in.