The Week Ahead: Washington's Turn To Drop New Years Ball?

Both chambers of Congress worked over the weekend to ensure that no Fiscal Cliff deal would accidentally get passed or announced before the last possible minute.  On Fox News, Senator Graham said that chances for a deal are "exceedingly good."  A few hours later, Majority Leader Reid spoke on the Senate floor saying that "there are still significant differences between the two sides," but that the Senate intended to continue negotiations.  Just over an hour later, the Senate adjourned, and will reconvene at 1100am EST.

We can only assume that Senator Graham was reprimanded by both sides of the aisle for being overly optimistic on air and that the comically late 11am start time is to help preserve the illusion of strife in Washington as long as possible.  To that end, who knows what the theoretical deadline actually might be!  Some have suggested that we have to make it through Boehner's re-election as House Speaker before more progress can be made (Jan 3rd) while others are hoping for an 11th hour deal on Monday night.

One thing's for sure: politicians seem intent on putting on a much better display of ball-dropping than Times Square this year.  Unlike the Times Square version, we don't really know what will happen in the final moments of Washington's ball-dropping ceremony.  With no other news or data on the calendar for today's shortened session (early close - 2pm), any headlines that help suggest an outcome will be most likely to inform trade.

Markets will then be fully closed on Tuesday for the New Years holiday and finish out the last three days of the week as normal.  There's a fair bit of data including the manufacturing and employment reports, but its traditional importance should continue to be overshadowed by the ongoing reaction to whatever sort of Fiscal Cliff progress (or lack thereof) unfolds throughout the week.