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Grand Bargain or Big Dud? Why The Next Move By Congress Could Be Huge

Breakout

Talk about procrastination!  After dueling for an entire year, House and Senate budget negotiators are sprinting to have a plan in place by the end of the week. 

At last check, the two side were about a trillion dollars apart, in terms of the deficit, but reportedly getting a lot closer to reaching… wait for it… a compromise.

“We’re seeing more and more reports that these guys in D.C. are starting to get along,” says Dave Lutz, head ot ETF Trading at Stifel Nicolaus, in the attached video.  

Like investors everywhere, Lutz has dealt with headwind after headwind blowing out of the nation’s capital this year, but in these waning days of 2013, he and other beltway observers think a thaw might come in the next couple of days. If it does, he says, it would mark a huge shift in the prevailing winds.

“One thing you have to look at is that any kind of budget deal is going to be removing an uncertainty,” he says. “Not having a shutdown or not having a debt default removes an uncertainty,” Lutz points out, noting that this one-week opportunity is something neither side can afford to screw up.

“These guys need to do something,” he says.

But what if that something turns out to be another pork-laden piece of a so-called grand bargain? Of course, the details of any agreement will determine whether it’s a win or lose, but Lutz argues that simply reaching a deal is not only important, but will be the setup for the next big fight set for January: passing a farm bill.

“As soon as they come back in session in the new year they have to tackle the farm bill,“ he says, raising the point that the Democrats and Republicans both have a tremendous amount to lose in states they didn’t carry.

“If we get a farm bill done, the markets could be looking pretty solid for 2014, at least from a D.C. perspective,” he concludes.

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