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Minyanville's T3 Morning Market Call: President Obama Returns From Hawaii to Work on Fiscal Cliff Band-Aid


While signs are not encouraging for a budget deal, volume and volatility could remain light through the end of the holiday-shortened week.

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US stock futures point to a slightly higher open as trading resumes following the Christmas holiday. Holiday sales came in short of expectations, but so far the market is shrugging it off. The unresolved fiscal cliff remains a weight on the market, and urgency will only increase as time runs nigh on 2012. After House Speaker John Boehner's "Plan B" bill fell flat last week, his support was undermined and it was left to Senate leaders and President Barack Obama to iron out a deal.

The president, who is returning to Washington today early from his family vacation in Hawaii, is seeking to push through a partial budget deal that would extend tax cuts for those making less than $250,000 per year, which would take care of a significant portion of the cliff. Republicans are hesitant to allow that unanimous part of the deal to go through without other concessions from Democrats.

The S&P continues to be under a bit of pressure, although a higher open today would be a welcome sign for bulls. The fact that we were able to rally after Friday's sharply lower open was a very positive sign. A gap-and-go to the downside would have been a day to take notice, but stocks showed some resilience. The next support pivot to watch on the S&P 500 ETF (NYSEARCA:SPY) is $141.88. While signs are not encouraging for a budget deal, volume and volatility could remain light through the end of the holiday-shortened week. Look for the real reaction to the fiscal cliff to come after the New Year, but that doesn't mean a clear lack of progress may not weigh on the proceedings.

I know we've had a lot to deal with in the last three months, from Hurricane Sandy to the aftermath of the European Crisis to the horrific tragedy that occurred in Newton, CT, but I do think the media, especially in today's social media driven 24 hour news cycle, focuses far too much on the negative things in our society.

With the amount of coverage given to the fiscal cliff, many Americans believe it is a hard deadline that will immediately unleash financial Armageddon. We are hearing about the potential new recession next year and the lingering possibility that the euro dissolves. If I had a quarter for every time someone said equities are dead, I would have enough money to be on vacation between Christmas and New Year's! I think the fear mongers are doing the retail investing public a disservice by scaring them away from equities.
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Scott Redler is long FB, BAC, YHOO, WFC, XHB, AAPL, TASR. Short SPY.
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