With news of the Fiscal Cliff being “avoided”, US futures are rising before the market open.
It will be interesting to see if the market moves into a full risk-off mode, or if investors will start worrying about debt ceiling negotiations.
In addition to the debt ceiling, I will be closely watching earning reports. CEOs’ now can use fiscal cliff “worries” as an excuse to report lower earnings than expected (in order to show stronger earnings later in the year, thus justifying their job to the board of directors).
Analysts’ forecasts seem to have not priced in fiscal cliff worries which may have prevented consumers and business from spending as much as was expected in December.
For those who want to read up on why firms smooth earnings and the impact it has on stock prices: