This is the last full week of trading for the year and at the time of this writing, there has been no resolution of the Fiscal Cliff. Yet the SPX is up almost 30 points and the Nasdaq is up 75 points in one and one half days.
I don’t think the market has ever fallen in the last week of the year, ever. That may be a slight exaggeration but the bottom line is that with only a few more trading days left in the year, the major indices will make new highs for the year.
Some say that we remain the best house on a shitty block because the market says so. Remember that each year since the Financial Crisis began, the Fourth Quarter is heralded as the beginning of an economic recovery only for those hopes to be dashed with the reporting of First Quarter numbers. This year will be worse, with the Fourth Quarter looking shitty leading up to an even worse First Quarter.
But in this Costanza Market, with the government out of money, again, all that matters is the FED’s perversion of $85 billion free dollars to buy the crap assets from bank balance sheets. The American public has no idea that this is underway and wouldn’t understand it even if you explained it to them, speaking slowly. As long as the last, best policy tool (stock market) remains “healthy”, everything is OK. Merry Christmas!