“You can’t always get what you want, but if you try sometimes, you just might find you get what you need.” I couldn’t help envisioning Nancy Pelosi, Harry Reid, John Boehner and Mitch McConnell on a park bench singing this song together over the weekend as they negotiate a tax and spending deal and ahead of the Rolling Stones 50th anniversary tour. I repeat my belief that a deal that doesn’t face healthcare spending head on and also raises taxes of substance with economic growth mediocre is not a good deal. This said, the markets will celebrate any deal in the short term but will likely deal with the economic consequences in 2013 (outside of capital gains induced selling in 2012). In Asia, the Nikkei rallied another 1.4% and is up 5.6% in the past three trading days as a new government may take hold on Dec 16th with a mandate to print a lot of yen. China said 35 cities of 70 saw home price gains in Oct vs 31 in Sept. In Europe, Spain’s Rajoy remains defiant against calls for a bailout as he said ‘the worst is over’ and the Spanish economy will be ‘better in 2013 than 2012.’ The Spanish 2 yr yield is near a two month high. European Finance Ministers meet tomorrow to try to hammer out a deal to come up with another 30b euros to bridge Greece over for the next few weeks, on top of what’s already been pledged to them. Expectations of a deal have the Greek stock market up 2.5% and the Greek 10 yr note is up 7 days in a row. On the markets response to the Israeli/Hamas confrontation, the Tel Aviv stock market is up .8% today after a 1.4% rally yesterday and has gotten back everything it lost last week.
