While positive U.S. economic data encouraged markets today, Washington politicians whipsawed Wall St. with rhetoric over the progress on Fiscal Cliff talks. House Speaker John Boehner declared no progress had occurred on talks after meeting with Treasury Secretary Timothy Geithner and a telephone conversation with President Obama, laying the blame on the President.
Afterwards, White House Press Secretary Jay Carney and Democratic Senator Chuck Schumer both released statements to the press expressing optimism that a deal would be reached before the deadline, in a successful attempt to calm markets.
Senate Finance Committee Chairman Max Baucus (D) told reporters that a deal could be forged on the basis of increasing government revenue by $1 trillion over ten years by reducing tax exemptions and a small tax increase on the wealthiest Americans, alongside major budget cuts. “If there is substantial revenue, over $1 trillion, and significant spending cuts, we are close to getting a deal.” he said.
Senate Minority Leader Mitch McConnell (R) also spoke to reporters today, claiming it is Obama’s responsibility to put forward “a specific, balanced plan” as a starting point for negotiation and claimed the Administration “took a step backward, moving away from consensus and significantly closer to the cliff” today.
As both sides posture for the cameras as time ticks away, expect the stock market to remain choppy and swing up and down in response to soundbites. The expected announcement of additional quantitative easing by the Fed, dubbed QE4, will raise inflation and currency debasement fears regardless of what happens over the fiscal cliff negotiations, and should provide additional support to precious metals.