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The New Year has only just begun. Congress has pulled on the bungee cord, and we bounced back from the precipice. 2013 tax issues have been addressed, but spending cuts have only been postponed for 60 days.
The markets breathe a sigh of relief, but there is a lot of work yet to be done. Congress needs to address entitlements: Social Security, Medicaid, and Medicare. Defense spending and other parts of the federal budget will not be easily decided. If you think that 60 days is enough time, do not forget that this fiscal guillotine has been up in the air since July 2011. While I’m not surprised that nothing was done before the election, getting a lame duck Congress to pass important legislation is better than we should have expected. But the work is far from completed. As Long Islanders who felt the full wrath of the storm, we are deeply disappointed that as of this writing the House did not allow the Sandy Relief Act get to the floor for a vote. All of this is a reminder that trying to time the market on Congressional action is a fool’s game. Many people were recommending selling out of all stocks and waiting until Congress acted. If you did that, you would have missed out on a 4% upward market movement on Monday, December 31st and Wednesday, January 2nd. We move from brinkmanship to brinkmanship until Congress gets it right. Our elected leaders need to be reminded that like us, they should pay more attention to the overall economy (which has been showing signs of improvement) than to the practice of rhetoric, which never trumps action. |
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