Positive comments following a meeting this morning between President Obama and Congressional leaders from both political parties lifted equity prices after another morning of market doldrums. Republican leaders John Boehner and Mitch McConnell joined Democrats Harry Reid and Nancy Pelosi at the meeting with the president.
After the meeting Reid said, “I feel very good about what we were able to talk about. We have the cornerstones of being able to work something out.” McConnell chipped in, “We’re prepared to put revenue on the table provided we fix the real problem.”
While there’s not enough time left before the fiscal cliff is reached, there is at least some hope now that the Obama administration and the Congress will be able to avoid the nastiest impacts of that cliff. Without an agreement by year end, all the existing tax cuts expire, government spending is automatically cut by up to $500 billion, and, some believe, the U.S. will tumble back into a recession.
Following the general election earlier this month, the S&P 500 index has lost about 4.3% of its value due in no small part to investor worries about whether or not a compromise is possible in the current political environment. The answer, at least for today, is a resounding, “Maybe.”