The call for this week: In D.C. the main objective has always been to keep the train from careening off of the track. Consider this, John Boehner is under pressure to make a deal because if he doesn’t he may not be reelected as Speaker of the House when the new Congress convenes (January 4th). As paraphrased from last Friday’s Morning Tack:
The leading contender for Boehner’s position (if he is indeed at risk) is Virginia’s Eric Cantor, who has what Shakespeare termed, “A lean and hungry look.” Having lived inside the D.C. Beltway, I think Boehner will “cave” and embrace the President’s 39.6% “Clintonesque” tax bracket, putting the Obama administration in somewhat of a ”box” as the Republicans turn the discussions away for social issues and towards entitlement reductions and the “debt ceiling.” If you start hearing names like Austin Smythe, Jon Traub or Alexis Covey-Brandt, who are all very senior staffers, you will know the “wheels” of an agreement are turning.
That view would gain traction if the S&P 500 (SPX/1418.07) can finally vault above the often mentioned 1420 – 1430 resistance level, which might be telegraphing such a “deal.” Regrettably, the NYSE McClellan Oscillator remains overbought and the stock market’s “internal energy” is pretty used-up. That means we are likely to continue going sideways (between 1400 and 1420) into this week’s Federal Reserve meeting. I will keep you updated via the daily Morning Tack.
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