It' s not if, but when. That's what the market's saying, and it doesn't blink anymore when commentators say things like, "They are really digging in their heels and not rising above" the politics of the moment.
You could say that some of this confidence comes from calls like the one from Oracle (ORCL) last night, indicating that the fiscal cliff is having no impact at all and that December was fabulous. Plenty of companies are saying things are fine. But I don't think that's the reason we aren't getting hurt when President Obama has a tough press conference about going over the cliff. For every Oracle, there's a GE (GE) or a Wal-Mart (WMT) that says things are slowing because of the cliff. So let's discount that.
No, it's the idea that there is give, that the president and the GOP are taking softer lines and that some deal can be crafted that everybody hates -- including the ratings agencies -- even if it isn't crafted until the Super Bowl. Taking the analogy a bit further, we don't know which teams will be in the Super Bowl, but we know there will be a Super Bowl and we know there will be a fiscal cliff, too.
Meanwhile, incredibly, the Fed once again has the equity and bond markets' backs. Companies and individuals can continue to refinance and lower the coupon on existing debt while the competition to stocks remains nil thanks to the Fed's bond-buying program. Plus, the program will continue until what the stock market really wants, employment growth, occurs.
So the Fed helps our country get over the fiscal cliff with a pontoon bridge until we build a real structure that gets the job done permanently.
