The market doesn't fear the fiscal cliff

It likes the coming together that we will see after we go over it.

By Jim Cramer Dec 28, 2012 10:09AM

thestreet logoDollar bills floating over US Capitol CorbisYes, it does all seem crazy. And while there are still two more trading days after today, the logical question to ask is: "If this is austerity on the horizon, why do markets seem to like it so much?"

Think about it like this. We know that we wanted Europe to put through pretty much what going over the fiscal cliff does, and those of us who think that growth is important don't like their plans. There's no growth stimulus. Austerity has led to lower interest rates, but those rates are really a function of central bank intervention.

Can our stock market really like a plan that has no growth kickers in it? So, logically we should be going down, not up.

Maybe the market is totally oblivious, and while we can make judgments that the market likes the fiscal cliff from the action, we can also presume the market doesn't know what it is talking about except for retail, which has been rolling over. But that's a tough fiscal-cliff-to-blame call because retail's been weak the whole season, a combination of ultra-warm weather, worries about the cliff and Superstorm Sandy.

This leads me to the most likely scenario: the market likes the coming together that we will see after we go over the cliff with the Republicans fighting vigorously for tax cuts and winning. That's why the sellers aren't dominating.

Makes sense. Grover Norquist really wants that. Some say he wanted the Plan B, but that's just nonsense. He wants nothing but tax cutting and that's what he can bargain with the president on through his committed minions. Turns out he was the most powerful man in Washington after all. Always will be, as long as the GOP owns the house.

Also, let's not forget how much the market is in love with gridlock. We know the next battle will be the debt ceiling and that will create another push for still smaller government and more rancor, which, while distracting, should no longer scare us because that's about debt downgrades that don't seem to matter so much anymore.

So, here's the bottom line. The market doesn't fear the cliff because good things come off it -- middle class tax relief -- and the rest is the long-sought agenda of fiscal conservatives everywhere.

We all acknowledge that a recession will be caused by the cliff if we don't get middle class tax relief, but if we do the fact that we didn't sell off big says that we will get it.

Those who don't believe in this thesis should be selling or shorting retail. The numbers are too high.

That's the best hedge I know.

Cramer's face

 

 

Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust.

 

 

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98Comments
Dec 28, 2012 2:04PM
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This fiscal cliff issue is way overblown
Dec 28, 2012 1:33PM
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Well I didn't notice any Santa Claus rally, so I hope he is hiding in the woods around the Pine trees.

 

I suspect we will have an "Eleventh Hour" deal of sorts, with re-openings and ajustments in the coming weeks....NOBODY wants to get stuck with a downfall on their resumes...

Plenty of soapboxing and finger pointing...But we will know who's at fault when the dust settles..

There will be NO HIDING..

If a Partial or an Acceptable agreement is reached over the weekend...I look for Santa to come out of the woods...

I will take NTU's bet, that if that happens?....I'll take his figures on the upside.

But I've already made the bets and they are down..

BTW, yesterday was a good day at the Tables..Close to 200 upside.

Dec 28, 2012 1:16PM
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Cramer can't grow anything on top of his head because the fertilizer between his ears won't even support veg life.  What a worthless twit!

Dec 28, 2012 1:13PM
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years ago if a country  economy  fall a dictator come to power and freeze the wealth that in the citizens hand for the  security and the future economy of the country we don't have this kind of system we have democracy and law and order but when the country need help the peoples should help and who make more pay more if some one make 1 million dollar a year if the government cut 100.000 dollar out of it in taxes he  will still be rich but is a mater of principal of those peoples they use to make lot of money and pay a little and they want to continue this way the small peoples will take the all on there shoulders and the rich will be untouchable i hope that they don't miscalculate there move if there is. they will fill the gravity of the situation in there businesses and there wealth and it will be to late to go back to December 2012
Dec 28, 2012 1:09PM
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The cliff is the deal........... then a week or 2 later they will pass a few bills more or less undoing half the cuts and tax increases in the cliff and then act like heros.  The cliff was made by congress and the pres, it will be partially undone by them.  All a bunch of grandstanding BS, the dems can say they didn't vote for these cuts and repubs can say we didn't vote for the tax increases.  Nonsense at it's finest.
Dec 28, 2012 12:59PM
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Miragolinsky, your satiation with the poor not paying federal taxes is mind boggling, Republicans are the one's who cut the bottom tax rate from 15% to 10%. Because Republicans cut the tax rates on the 47% they no longer qualify, just like thousands of millionaires who pay no federal taxes each year under the reduced rates. Why do you insist on blaming Obama and the Democrat's for a situation that the Republican party created. The facts will never change, after Republicans took over all three houses in 2001, we went from a $237 billion dollar surplus and a falling debt to GDP ratio to a $1.3 trillion dollar deficit in 2009. Republicans doubled annual spending increases and cut revenues at the same time, a true recipe for the disaster and that's what America got. Republicans added agency's like TSA, Home Land Security, No child left behind act, TARP and added the largest entitlement expansion of my life time with Medicare D, and like a cherry on the cake they spent $2 trillion on two wars and never raised a dime to pay for it. In 8 short years we went from a annual budget of $1.9 trillion in 2001 to $3.5 trillion by the end of Bush's last budget for 2009. Republicans almost doubled government spending in 8 years. Obama's gone from $3.5 trillion to $3.8 trillion, only a $300 billion dollar spending increase, compared to the $1.6 trillion dollar increase under your party. Put the blame where the blame should be, in your lap.
Dec 28, 2012 12:59PM
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If we go over the cliff we get spending cuts and tax hikes. The crooks is DC are debating how to cut spending and raise taxes. Do you see a difference? Neither do I.
Dec 28, 2012 12:54PM
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The Market is not a person - it cannot feel anything - like most corporation - who pays you Crammer - the market makers?
Dec 28, 2012 12:50PM
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@jim122. People like you say this sort of thing every year. And every year you end up saying the same old thing again. Every year is going to be the end of the world. The market has the "end of the world" priced in. Didn't you know?
Dec 28, 2012 12:48PM
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If you want to know why our country is in the predictament it is .... read these posts !
Dec 28, 2012 12:47PM
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I'M A 60 YR. OLD MAN AND HAVE WATCHED THE STOCK MARKET GO UP AND DOWN FOR MANY YEARS.  I HAVE 2 401 K ACCTS. AND I JUST TURNED ONE IN AND THE OTHER ONE I PUT IN STABLE BECAUSE I'M STILL WORKING.  I THINK THIS YEAR IS GOING TO BE ONE OF THE WORST YEARS WE EVER HAD DUE TO THE PEOPLE RUNNING THIS COUNTRY.  GET READY FOR THAT ROLLER COASTER GOING STRAIGHT DOWN, AND NEVER GOING BACK UP.
Dec 28, 2012 12:39PM
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The people seem to be as evenly dis-united on solving the "Fiscal Cliff" thing as our irresponsible and feckless government.

 

I for one hope we do go off the "cliff."The American People have been held hostage to the extortion of endless wars since 9/11 and the bogeyman of terrorism. These tarpheads wouldn't stand a chance on American soil, but we are supposed to be so afraid. Nuts to that. Let them come. there are parts of this country that no terrorist would let themselves be caught dead in.

 

The American People (that's all of us) have been held hostage since we allowed the "too big to fail" and the "too big to jail" to extort one bailout after another from the American People (in the guise of the FED). Let the thing fail.

 

Are you not as tired as I am of one extortion racket after another? Regardless of what happens, do you think the politicians will stop getting their pensions, and their health care, and pay checks? Not as long as they continue making you pay their taxes.

 

Time to call the bluff of our criminal shyster politicians and banksters. Let the thing go over the cliff.

At least we get some peace and quiet. That alone would be well worth the end of everything. Oh, the joy of peace and quiet. Think of it.

Dec 28, 2012 12:25PM
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Do not TRUST this market it is a criminal enterprise that SCREWS the small honest investor !  TAKE YOUR MONEY AND RUN BEFORE IT IS TO LATE !
Dec 28, 2012 12:19PM
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Going over the cliff will mean a huge increase in federal income taxes!
Dec 28, 2012 12:11PM
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No matter what the gov does,I don't see the market doing too much in either direction.Think about it - every time Ben&the fed talked about what they MIGHT,MAYBE,COULD do the market would go up,but only until the fed actually did something and it would go back down or stay fairly level.
The past few weeks the only "rallies" in the market have been because someone SAID something about a possible deal.
It's a W O R D  market,when they like what they hear,UP.Facts and actions seem to have very little effect.

Dec 28, 2012 12:07PM
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david carver (crazzy dave):

You must be related to Nicky Manaj by throwing around the race card freely like that !

 

BTW: my office manager of 25 years is BLACK .

 

Unfortunately, I will be absorbing her work load when she retires at the end of this year & I won't be able to rehire someone on account of the inaction by congress. But don't worry about her; she is a wealthy woman in her own right, and she attained that by HARD WORK EVERY DAY !!!

 

Now go back down to your basement, eat a twinkie & see if you still get your 'check' next month !!

Dec 28, 2012 12:05PM
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Nice to see all the political hacks have now found their way back home.  Spewing their venom and hate.  Sooo hard to understand Liberals preaching for equality, fairness, and life while the blood vessels bulge out of their necks as they scream Kill Kill Kill.
Dec 28, 2012 12:02PM
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The market might not be afraid of the cliff, but I bet it's worried about being pushed over the edge.
Dec 28, 2012 12:02PM
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Our government is like a crazed shooter on their way to kill as many school children as possible. What's worse is America is doing what it always does -- NOTHING. We deserve all the shooters we get.
Dec 28, 2012 11:53AM
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My wish for 2013 is Norquist in a jail cell along with blankfein, cramer and a few others .......
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