• The CBO predicts that the U.S. economy will shrink by 0.5 percent in 2013, and unemployment will spike up to 9.1 percent from its current level of 7.9 percent, if no fix is passed.
• The ‘parties’,  the Obama administration and the House Speaker are posturing but not negotiating. The days are few and the likelihood of a ‘deal’ decrease by the day. Uncertainty is bad for the stock market.
• Let’s consider a few countries. Greece – down 88% in 2012 due to austerity/debt problems; China – the Shanghai Composite at a 43 month low since investors do not trust their leaders. Egypt, $6 B loss in the last two weeks.
• The headwinds are looming austerity, not trusting leaders, uncertainty = lower markets.

Usually, December is a strong month for the markets. My strategy is to stay in mostly cash until we have a better idea on how this will all play out.

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