Budget deal

U.S markets sold off yesterday and the Russell 2000 had the biggest drop, finishing down -1,6%. The S&P 500 slid -1,3%. Nikkei is down 1,1%. Investors are waiting for a FED tapering next week.

The Democrats were concerned about the possible effects on federal employees. Negotiators included pension payment increases for military personnel to mitigate the effects on federal workers. No one spend so much money on military than U.S. Why not cut the spending here?Republican leaders want to increase user charge paid by airline passengers and try to reduce the deficit by an additional $20 billion.

Investors are looking forward to next U.S Federal Reserve`s Open Market Committee (FOMC) meeting (December 17 – 18). Last friday we saw a stronger than expected U.S jobs report and that led the FED to move its timeline for implementing a tapering (QE) earlier than expected and that is at the next week`s FOMC meeting.

All the speculation on the tapering process is that it has numbed traders to the actual event, but some say that the markets have already mostly factored into their price structures the Fed tapering, when it does occur. If so, we will see the S&P at 1900 at the end of this year.

Ben Bernanke have a few weeks left as a chairman in Fed. Is he gonna do something before he steps down? How can the Fed stop QE, because QE is funding the U.S federal deficit? The U.S is spending more than they are earning.

They can start to taper 5 or 10 billion and probably cut some number of mortgages they are buying from the Wall Street bankers, but what is the odds for that? Anyway, this is not going to be easy for the middle class. Be prepared!

News today: Core Retail Sales, Retail Sales & Unemployment Claims at 8:30am, Business Inventories at 10:00am, 30 Year Bond Auction 1:01pm.


Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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