Fiscal Cliff Bumps

The fiscal cliff deal will not be as easy as the market is thinking.  No one can be 100% sure what the government will do with the fiscal cliff, but if the past is repeated, the deal will be done in the final hour with a lot of grandstanding, political posturing, and refusal to yield.  This should be unsettling for the markets in the short term, probably in the next 2 weeks. 

I would be surprised if the Republicans would give in on the tax rate hike for the rich so easily without a fight.  And this time, Obama is not running for re-election so he won't cave so easily into extending those Bush tax cuts.  Expecting a fight on both sides at least in the initial stages of the negotiation, which is contrary to the current belief that both sides are eager to get a quick deal done.  The return of Congress from Thanksgiving break is the last thing the bulls want to see.  The huge rally over the past week has set up us for a healthy pullback on any signs of a less than smooth fiscal cliff negotiation.