Well, that’s what we’re told anyway. Tomorrow is the Mayan doomsday prophecy and/or perhaps a fiscal cliff deal. I believe Obama was slated to leave for a Hawaiian holiday, but that may be postponed.

The Executive branch and the Senate and House of Representatives each has a role to play in the budget process. The congress is divided. Compromise is the only solution as in, “I’ll give you X and you give me Y”. This is the way it should go but the House and WH are wide apart with only some give around the edges. The House Speaker, John Boehner, through a bill is publicly putting his side’s agenda to a vote. So that’s a marker from which to negotiate theoretically. And, yes, the Senate will not take up the bill if passed so as not to legitimize it.

Perhaps by the time you read this the world will have ended making this analysis moot.

Jobless Claims rose (361K vs 359K expected & prior revised higher to 344K). The previous lower report may have been an outlier. The average for 2012 is demonstrated below and this report remains near the average.

(click enlarge image)

GDP final Q3 data was at 3.1% which was greater than prior estimate of 2.7%. Under the hood, nearly half the annualized growth was from government (.75%) and inventories (.73%). Personal Consumption rose 1.12% but below previous estimates of 1.42%. Q4 estimates are averaging only 1%. Below is a graph from the BEA.

(click enlarge image)

Philly Fed Survey rose (8.1 vs -2 expected & prior -10.7) while Existing Home Sales rose 5.9% (5.04M vs 4.94 expected & prior 4.76M). Both were excellent reports with the latter in complete contrast to Monday’s Empire State Index (-8.1). So we’re left to scratch our heads.

Stocks were flat earlier and then rose once Speaker Boehner said he’d still be negotiating with the president once his bill has passed. This caused stocks to rally modestly. But then leader Harry Reid adjourned the Senate with the intention of reconvening December 27^th for another round of the mini-series. Basically Reid & Co are just the closing act anyway but there won’t be a deal before Christmas it seems.

The bigger news is the ongoing sell-off in precious metals. Some are finding explanations difficult but it seems it involves two basic issues: hedge fund redemptions and sector rotation. With the former heavy selling it feeds on itself triggering stops and more selling. We won’t know the seriousness of it until January frankly. Gold (GLD) and silver (SLV) are leading metals lower. In sympathy copper (JJC) has also been driven lower. Frankly with the dollar (UUP) falling and central banks in full money printing mode, commodities and precious metals should be soaring.

Financials (XLF) (KBE) and real estate REITS (IYR) (RWX) led the way higher. Bonds (IEF) were stronger while commodities (DBC) were weaker. Naturally financials were helped by the ICE takeover of the venerable NYSE. The buyer liked the brand and possibly their HFT center which accounts for most of the volume these days.

Volume was modest while breadth per the WSJ was positive.

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