The Only Thing You Need To Know About The Fiscal Cliff Stories Over The Weekend

Harry Reid John Boehner

Photo: CNBC

There’s only one thing you need to know about the Fiscal Cliff news stories that came out of the weekend. The tone of the current state of negotiations is being described as “good” and “conciliatory.” So far, anyway, people expecting Debt Ceiling 2.0 are not seeing the script play out identically, although things could always fall apart.JPMorgan’s Early Kickstart summarizes the two big stories, from WSJ and NYT. This is useful in terms of the key points that Wall Street is taking away from the news.

Fiscal cliff talks – aids said Congressional leaders and Obama Friday agreed to a two-step approach that would make a down payment on deficit reduction this year to be followed by a larger fiscal package in 2013.  However, tough issues remain unresolved and the two sides remain far apart on some crucial matters, inc. the expiring Bush rates.  Staff will meet in the coming week and the major principals will gather again after Thanksgiving.  Despite some areas of disagreement though the tone in talks between both sides has been remarkably conciliatory.  WSJ

… the NYT has similar background on the state of negotiations.  A two-pronged plan is being considered, w/a ~$50B deficit reduction for 2012 followed by a “framework” to shave ~$4T from the deficit via a combination of spending cuts and revenue increases.  The Bush tax rates are still a sticking point.  Republicans were heartened to learn that Obama has tasked Geithner as being the lead negotiator on the matter instead of Jacob Lew (relations between Boehner and Lew soured after the breakdown of deficit talks in 2011).  NYT  

 Meanwhile, SocGen’s Kit Juckes describes the mood of the morning:

You are going to have to decide how cynical you are this week. Initial ‘fiscal cliff’ negotiations produced optimistic/encouraging sound bites and President Obama is travelling in Asia telling all and sundry how committed he is to finding a solution. I heard a radio interviewee describe the cliff as a red herring (a herring falling from a cliff would indeed be red). That the initial talk was positive is surely neither surprising, nor significant. But, we come in this morning to find a more risk-friendly mood.

SEE ALSO: Everything you need to know about the Fiscal Cliff >

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