It’s pretty snowy and frosty in my part of the world. That said, we are two weeks into January and there have been some exceptionally profitable trading days so far this year, January 2nd being the first of them.
It was almost so predictable, the USA did not fall off the fiscal cliff. No real surprise at all. The element of surprise was contained to the extent that the US politicians have been taking careful note, maybe even having private coaching from their European counterparts. Collectively, the US politicians managed to kick the can down the road. It worked in Europe in 2012, so why not in the USA too?
So far, all that can be said is that the USA did not kick it that far, only to the end of February. Some tax increases if you earn more than $400,000. No agreement on the deficit, either in the ceiling or the budget cuts. These will be agreed by the end of February.
The question then is what time in February? After all, everyone suspects it will be on the 28th already. And will they have another go at kicking the can down the road after that? Can kicking could even become the latest international sport. With two continents playing together, the French would have to contribute the musical accompaniment with the Can Can.
Sorry, I digress. To me, the bigger surprise was the positive reaction given by the markets to international can kicking. Europe and the USA are now both making no decisions, solving nothing, putting the problems off until tomorrow when they’ll be bigger. And the market’s reaction? Fantastic. Let’s celebrate and drive the markets to four year highs.
Keep trading.