The Republicans in the House couldn’t agree to raise taxes at all and cancelled last night’s vote on the Republican Plan “B” Deal that would increase taxes only for those making above 1-million. That calls into question the ability of the House to pass a fiscal cliff deal that involves any tax increase. Presumably, the Democrats in the House could join with the moderate Republicans and do something.
On the Democratic side, it would appear that
the only change to entitlement programs possible is one that reduces Social
Security cost of living increases. This
isn’t looking good for a meaningful solution, or even a 1st step toward solving our deficit problem.
Regarding cost of living; I always thought
that COLAS already cheated retirees. For
example, the Consumer Price Index shifts the basket of goods considered, as prices
change. For example, if beef prices go
up, an assumption is made that consumers will switch to chicken. Extending that rationale to an extreme
conclusion (for the sake of argument) would have all the elderly that rely on Social
Security eating dog-food. For a
discussion as it relates to the cost of a Big Mac, read on…
BIG MAC AND CONSUMER PRICES
“The rise in the price of a
Big Mac is faster than the official rise in consumer prices and has been since
the late 90's. In 1998, the average price of a Big Mac was about $2.50. Today,
the average Big Mac is $4.33. If we were using the Consumer Price Index (CPI),
the price of a Big Mac today would be about $3.35.” - James
Cornehlsen (December 17, 2012) from
dshort.com. Full discussion at… http://advisorperspectives.com/dshort/guest/James-Cornehlsen-121217-Big-Mac-Inflation-Risk.php
RECESSION? – NOT ACCORDING TO D. SHORT
UNDERMINING THE ECRI RECESSION CALL“…the November strength exhibited by Personal Incomes and Industrial Production certainly undermines their (ECRI) recession call… ECRI, however, has "walked the plank" with the company's recession call. And at this point there's no "Peter Pan" recession to save them from a sea of crocodiles.” – Full analysis and charts, Doug Short, dshort.com at…
http://advisorperspectives.com/dshort/updates/ECRI-Weekly-Leading-Index.php
MARKET RECAP
Friday
the S&P 500 was down 0.9% to 1430 (rounded). VIX was up 0.9% to 17.83.
NTSM
I have what appears to be some bad volume data
from my usual source for NYSE volume today. I
will post tomorrow regarding the NTSM status after I check other volume
sources.
I’d like to comment generally, on the recent
NTSM analysis.
Normally, if there is a switch in direction of
the markets, the NTSM system will generate numerous signals in the direction of
the move. For example, the sell signal
last April involved every indicator and persisted for many days.
Tuesday’s BUY signal (that I ignored, so far)
only involved 2-trend-following indicators and was not repeated. Further, the Sentiment indicator switched to
sell Wednesday. As a result, I will
continue to wait for more clarity before I get back in the market – if at all. If the Sentiment indicator had switched to
sell on Tuesday (one day earlier), there never would have been a “buy” in the
first place. To summarize, we may as
well cancel the Buy recommendation of last Tuesday and wait for confirmation,
one way or the other.
MY INVESTED POSITION
Based on the SELL signal, 7 November 2012, I
moved out of the stock market at 1377 on the S&P 500. Because of the negativity I have noted from
Hussman and others, I am currently invested in a range of near 15% invested in
stocks. 
