stock_creeper's  Instablog

Did you read about how we're on this so called 'fiscal cliff' and that the market is going to crash because we're going to have all these new taxes and automatic cuts? In fact, it's so obvious this will end badly that Wall St. is up 8% for the year. At this rate, we'll be at 14,000 by the time those dreaded cuts come in lol

I'm not losing sleep over Taxmageddon and neither should you. Oh and Wall St. continues to ignore Europe, jobs or housing because those things haven't had much negative impact on fundamentals.

What is Taxmageddon?

The Taxmageddon effect has been estimated at roughly $500 billion in 2013 alone. It includes the [expiration of the] Bush tax cuts, the general payroll tax rate hike, the regular extenders, the death tax (estate tax) and some of the tax hikes from Obama care.

Like the S&P debt downgrade or the debt super committee failure nothing will happen and that's why stocks are brushing it off. The actual economic impact of these cuts are minimal versus the erroneous, but widely disseminated 3% projected GDP decline. Profits & earnings, exports, productivity will still be blowout even if GDP falls a tad. Apple and Google will keep beating the street. Oh and interest rates still never going up, especially now that GDP will be soft.

Stocks have already digested this news. Maybe instead of the S&P 500 being up 12% this year it is 'only' up 8% because of Taxmageddon. Thus the correction occurred in the virtual trading space.

Obama knows that if the economy were to somehow fail (which I reiterate is exceedingly unlikely) due to Taxmageddon it would dim the prospects of his successor. We should expect Obama to compromise to extend the Bush tax cuts in a game of hot potato that will continue for many future administrations until it becomes irrevocable like social security. It's ineffable how the Bush legacy of tax cuts, Guantanamo, TSA & homeland security proliferation, patriot act, and Middle East intervention has been perpetuated despite leaving office with the lowest approval rating of any president. I guess that's a testament to their effectiveness.

Gay Marriage

Was Obama's endorsement of gay marriage a calculated political move? Yes. Like the protracted secret service scandal or student loans subterfuge, Obama's 2012 modus operandi is to dominate the media cycle by diverting attention away from his weaknesses like jobs, Iran, national debt, and oil & gas prices.

Will this strategy work until the election? Probably not. Obama will run out of diversions and the relentless increase in oil & gas prices, ballooning debt, and pathetic monthly job growth will become front and center issues like they were in early 2012 and 2011. Obama will be forced to answer about future tax hikes or his lack of an energy policy. Or the misappropriation of stimulus funds or why so few jobs were created.

Obama's downfall is Romney's and Wall St.'s gain. Not only is Obama taking a stand on Marriage that most Americans find reprehensible, but he also flipped flopped on it, demonstrating a lack of leadership.

Among people that are most likely to vote the majority oppose gay marriage. Young adults support gay marriage by large margins, but voter turnout among the 18-24 year-olds is the lowest of any age bracket. This a was a gamble by Obama to invigorate the youth base like he did in 2008 except it will fail because Obama's coolness factor has worn off long ago. Endorsing gay marriage won't help him win the invaluable wing voters.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.