"The markets wanted to hear the president say a deal on the fiscal cliff would get done," wrote National Alliance Securities' Andrew Brenner, in a quick note. "He said it 17 times … which proves that if you say it enough, people will believe. … Do we believe it? Sorry Charlie …not a chance … the tax rates disagreements seemed to (be) ingrained in stone … and while a deal will get done eventually, we doubt today's rally can last until we hear more progress from Boehner and there are significant negotiations."
The fiscal cliff is the $500 billion or so hit to the economy from the reversal of tax breaks and new automatic spending cuts, starting Jan. 1, if Congress doesn't reach an agreement. (Read More: Congressional Proposal Could Create 'Bubble.')
One very interesting comment that the market seemed to ignore in its up again, down again fiscal hiccups Wednesday morning came from Erskine Bowles, who co-chaired the White House's 2010 deficit-reduction panel and is now working to try to broker a deal. Bowles said at a Christian Science Monitor breakfast that the White House will not stick to its current position that top tax rates revert to the Clinton-era levels.
Bowles' comments were based on his Tuesday meetings with Obama, Treasury Secretary Timothy Geithner and other White House negotiators. "I didn't sense it. I heard it," Bowles was quoted as saying on tax rates.
Stocks skidded Tuesday afternoon after Senate Majority Leader Harry Reid threw doubt on the talks by saying little progress was being made. Stocks ended the day with losses.
"If it (the market) really gets cliffed, maybe step up and take advantage of it little bit. It could be a good opportunity if you have a shopping list," said James Paulsen, chief investment strategist at Wells Capital Management.
"I just think there's very high odds that they'll eventually come to an agreement … some small tax hikes, some small spending cuts, and a lot of it will be put off for another day," Paulsen said. "The fiscal cliff is going to turn into a fiscal molehill."
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