The title of a recently released Bloomberg article is “U.S. Stocks Drop as Budget Deal Spurs Bets on Fed Cuts” (Web-site/URL: http://www.bloomberg.com/news/2013-12-11/u-s-stock-index-futures-little-changed-after-budget-deal.html).
“U.S. stocks FELL a SECOND day, after an all-time high for the Standard & Poor’s (SPX) 500 Index, as a Congressional budget accord fueled SPECULATION that the Federal Reserve (the Fed) could TRIM stimulus next week”. “speculation” is basically an INTERPRETATION (Web-site/URL: http://www.youtube.com/watch?v=NgnAY_eXYbI).
According to Jeffrey Kleintop, “chief market strategist at LPL Financial LLC in Boston, (speaking) in a telephone interview”, “We’ve MOVED MUCH CLOSER for the Fed to taper (STIMULUS) in December (2013)”, which, again, IS NOT good..
Finally, according to Alexander Friedman, “chief investment officer at UBS AG’s wealth-management unit”, speaking to Bloomberg‘s Anna Edwards”, “The budget deal itself is AT BEST a signal that we WON’T shut the government down at the start of the new year (2014). It’s a low base that we’re DECLARING VICTORY FROM. The key message for 2014 is THE REAL ECONOMY IS GETTING BETTER. For investors however, it’s probably NOT going to be the same sugar high (that we’ve seen for the last five years”. Here’s a life lesson: we CAN’T rely on “sugar highs” or ADRENALINE forever.
The other conclusion is: this budget deal SHOULD BE a positive. Instead, this is A NEGATIVE because STIMULUS will be CUT. This HEAVY reliance on the Fed reinforces the fact that the US economy remains fundamentally WEAK.