Last night there was a woman having a baby on the Chicago CTA, so my commute turned into a two hour adventure. No word on the health of baby “Belmont” or the mother, but I like to go with no news is good news.
The real good news was my extra-long trip gave me a chance to listen to some great reporting from NPR about the upcoming fiscal cliff. The focus was on defense spending and what would happen when we fall over the fiscal cliff.
The defense budget would be cut by 10%, as many other budgets would be cut. That is not the problem. The problem is that the 10% has to be done equally across all orders and segments within the military.
Where the issue will see huge challenges are areas like new submarine orders. The US government ordered two new trident nuclear subs. They cannot move that order down to 1.8 subs to reflect the cut in spending.
So we are probably only a few weeks or months away from calls to the US Congress to get its act together. The warnings that main street will give will revolve around jobs, as it was suggested that the uncertainty surrounding the 2013 defense budget could cause the loss of up 1 million jobs.
Knowing that Obama can’t get Congress to tie its laces, the idea that this problem will be solved before November is very slim. Twiggy slim, in fact. That sets us up for a rush of policy in December, which is not a month known for big political action.
My question is when is it too soon to position your portfolio for the coming crisis?
To read this article on Zacks.com click here.
Zacks Investment Research
