Nomura’s Negative Take On The Fiscal Cliff Situation

Lewis Alexander

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Last night we brought you analysis from Eurasia’s Sean West, who pegs the odds of a Fiscal Cliff deal today at 2-1 in favour.On the flipside, Nomura’s Lewis Alexander sees only a one in three shot of a deal happening in the next couple of days.

The situation is very fluid but at this point we see the likelihood of completing a “mini deal” in the next few days as about one in three.  There is a desire to get something done tomorrow (Monday), before yearend. But if negotiations are making progress it is possible that they could extend beyond tomorrow. The “lame duck” Congress can continue to act until the new Congress is sworn in on Thursday, 3 January.  While reaching a mini-deal in the next few days would be a short-term positive for market sentiment, it is important to recognise what such a deal would still leave many big issues unresolved.

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