Business leaders are once again heading to Washington this Wednesday to try to talk sense into policymakers who have apparently backtracked on fiscal cliff discussions. Sentiment heading into this round of meetings suggests that the Thanksgiving holiday allowed Democrats and Republicans the time they needed to dig some trenches and ready their fingers for pointing across the aisle.
When asked about what was holding up progress, U.S. Senate Majority Leader Harry Reid, a Nevada Democrat, told press, “It’s Republicans.” Reid reiterated that little headway has been made since talks began before the Thanksgiving break.
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Goldman Sachs Group (NYSE:GS) CEO Lloyd Blankfein is one of the executives who will try to lend some wisdom to policy makers. Blankfein, like many other Wall Street executives, has weighed in on the fiscal cliff issue with a level head that does spare either side.
“Without having a bias on which way the compromise should be generated, I believe our legislative leaders should affect a compromise. And in the long-run, the failure to do so will lead to less confidence in the U.S. which will have vast implications for a country that again is the strongest economy, whose currency is the reserve currency of the world,” he said in an interview with Marketplace.
Other CEOs heading to Washington include Yahoo’s (NASDAQ:YHOO) Marissa Mayer, Coca-Cola’s (NYSE:KO) Muhtar Kent, Home Depot’s (NYSE:HD) Ken Frazier, and Caterpillar’s (NYSE:CAT) Douglas Oberhelman. It will be interesting to see whether or not the executives agree with Reid, that Republicans are the problem, or whether it is a systemic failure of the culture in Washington to produce solutions…
Co-chairman of Obama’s 2010 fiscal commission Erskine Bowles told reporters that he believes “the probability is we’re going over the cliff.” While he isn’t involved in the budget negotiations, he pegs the probability of a solution being found before the end of the year at one third. “There’s no scientific basis for me to say one-third, it’s just what I feel having spent my life as a negotiator.”
Speaker of the House John Boehner struck a different note on Wednesday when he (figuratively) pointed his finger at Reid and announced that he was optimistic about the ongoing budget talks with the President. His comments coincide with a mid-day recovery in the U.S. equity markets after a morning slump that was catalyzed by poor housing numbers and ongoing concerns over the Greek debt crisis.
A critical part of our CHEAT SHEET Investing Framework investigates how top-level management is essential to the success of a business. Particularly in tough times and dire straights leadership more than anything else can turn around a sinking ship. CEOs like Mayer from Yahoo are taking a break from their own tremendous turnaround efforts to demonstrate what that leadership looks like.
Market participants can only wait, watch, and hope that policymakers can walk away from today’s meeting with some actionable insights. Until then, as chief investment officer at BMO Private Bank told CNBC, “we expect daunting headlines and emotional market volatility.”
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