Probably every single analyst has expressed throughout the week his thoughts about possible “fiscal steep” in the US and its circumstances.
“Fiscal steep” is a situation that is possible from January 1 of 2013, when the budget amendments will come into effect in the USA. The amendments stipulate tax boost and reduction of government spendings in the amount of 600 billion dollars (approximately).
This event is especially important for analysts and prognosticators from Wall Street and neighbouring houses. Yes, the situation is not easy, but the economy of the US should not follow this scenario, since it is based on high government spending and a huge budget gap, what will happen to it in case of cutting the consumption is not clear. At best we will see zero growth indicators.
Of course lately there has been an escape from the risk and descent of all stock indexes in the US as well as other indexes.
However on Monday Barack Obama brought good news to the market: according to the first meeting among political leaders the points of coincidence were found on negotiations. It means that the problem can be eliminated before it even appears, before the New Year.
But this is just an oral statement and one should watch carefully the situation with the US budget and the possibility of the “fiscal steep”, before making any decisions. Meanwhile the traders reacted pretty actively to the president’s statement and started buying actively the safety stocks on American share market.
On the one hand end of the election and certain equivocation is gone, the problem of “fiscal steep” is being actively discussed, but on the other hand the risk of the unfolding conflict in Middle East is growing, which may lead to rise in petroleum prices.
Rise in petroleum prices will negatively affect the economic operational activities and that will make sell the risk again. Meanwhile everybody is buying the risk and will do it within next few days.Social button for Joomla