That's it. Nothing on the estate tax, or payroll tax cut, or unemployment benefits extension. And no delay in sequestration. Pretty thin, I know. And it's not even clear if markets would be satisfied with this, but it's hard to believe a deal this thin would be viewed as positive.
Remember, there were two elements traders were looking for in a deal: 1) that it be before the end of the year; and 2) that it be substantive
The first element would be satisfied, but would a deal like the one I outlined above really be considered "substantive?" I doubt it.
And the Grand Bargain? I love the New York Times story yesterday that House Speaker John Boehner (R.-Ohio) has the backing of most of his House colleagues, but it may not be good enough.
1) China wakes up. Shanghai Index up 1.6 percent today, 4.1 percent this week.
I noted last week how bitterly disappointed mainland Chinese investors have been this year. The new Chinese leadership has said nothing about their plans for the economy — until this week.
On Tuesday, when Communist Party Chief Xi Jinping, the likely successor to Hu Jintao, finally said something in a politburo meeting: "China will make more efforts on expanding domestic demand and fostering new consumption growth areas."
There were references to supporting "urbanization." That's China-speak for more stimulus.
The Shanghai Index rose 2.8 percent that day.
Today, there are reports the Chinese leadership will soon reaffirm their 7.5 percent outlook for 2013, same as 2012. In other words, there are attempts to call a bottom. There's also reports many provinces will be rolling out aggressive infrastructure projects.
China's economy has slowly begun improving on its own; recent manufacturing (PMI) readings have improved, and steel prices are increasing, a good leading indicator.
2) German investors: We didn't get the memo. The German stock market may be at a new high, but central bankers there are cautious about growth in 2013. More than cautious: The Bundesbank is warning that a recession could be coming in Germany. The forecast is for gross domestic product growth of 0.4 percent next year, down from 1.6 percent forecast six months ago. Austria also cuts its growth forecast to 0.5 percent from 1.7.
Even admitting that growth projections are notoriously off the mark, these are pretty large downgrades. Anyone claiming there are signs of a clear bottom in Europe is kidding themselves.