On Friday I asked the Zacks community what they feared the most right now (Europe, China, Fiscal Cliff or nothing as market will move higher).
Not surprisingly the Fiscal Cliff was the #1 concern as it would be a poison pill for the economy to swallow. Gladly I think there is some relief on that front:
If Obama is elected, then he promises that 98% of US citizens will see an extension of the Bush era tax cuts.
If Romney is elected, then he promises that 100% of US citizens will see an extension of those cuts plus another 20% decrease in rates with elimination of some write offs.
Meaning that a good chunk of the Fiscal Cliff problem has already been addressed by the candidates. And since most Presidents earn a good chunk of political capital from the election, then they will likely get passed whatever they want out of the gate.
So I like the odds for this just to be a consolidation period followed by a move to new highs. More a matter of “when” instead of “if” in my book.
Best,
Steve Reitmeister (aka Reity… pronounced “Righty”)
Executive VP, Zacks Investment Research
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