Tired of the “fiscal cliff” drama, I decided to escape reality — I watched reruns of “The West Wing,” the hit TV series that ran from 1999-2006. I always enjoyed its intellectual banter, especially the humor of the White House staff, the president and other characters. But I didn’t remember something...there were some nasty turns between the White House and Congress, and in some episodes the discussion got downright rancorous; power plays ensued, filibusters started and tempers flared. It struck me that this was too close to reality and perhaps reruns of “Seinfeld” would be a better outlet, with only the clownish behavior of Jerry and his buddies mirroring the antics of some of the players and events that have transpired in Washington, D.C.
Though the fiscal cliff was avoided narrowly, it wasn’t without bad feelings, threats (from both sides), anger and deal-making. The best that can be said of it is, it’s done for now. No one really was satisfied, and, frankly, that pretty much summarized 2012.
Although this issue highlights key movers, shakers and events, the true game changers are what traders deal with every day: Supply/demand, government reports, earnings data, imports/exports and geopolitical actions. These fundamentals, as well as the technical picture of the markets, are what’s truly important to traders.
That said, there are many people and events who did make an impact on the markets. Check out our list of Top 20 most influential: 2012 movers and shakers as well as the Tops and Bottoms of 2012. Although the U.S. presidential campaign inundated the airwaves on a daily basis, the true market factor was uncertainty: Both parties had dramatically different plans for the country and the election’s outcome would affect large swaths of business and industry.
For the derivatives industry, that meant whether or not Dodd-Frank would be watered down or take solid shape going into the new year and new Congress. For the health care industry, it meant so-called “Obamacare” could be rescinded or remain the law of the land. The election result kept things pretty much status quo, that is, a couple more Democrats in the Senate as well as the House, but the control remained the same for Congress as well as for the White House. And from what we could tell from the fiscal cliff debate, the partisan fighting promises to continue as well.
Yet at least certainty is back. This gives hope to some late-year developments: One is what I like to call “the little engine that could” move, that is, the IntercontinentalExchange (ICE) purchasing the New York Stock Exchange for $8.2 billion. This is the derivatives industry’s version of an upstart such as AOL buying Time Warner. Jeff Sprecher, ICE chairman and CEO, is the businessman behind the deal...he also was the one who almost upended the CME/CBOT merger, so he does have a history of making an impact.
And despite the uncertain gloom during the year, the stock market ended on a gain: Nasdaq, the tech index, was up 15% for the year, a hint of good things going forward — we hope.
The key downside to 2012 seemed to be that illegal behavior doesn’t get punished, or not much (perhaps not everyone sees that as a downside). Exhibit A is Jon Corzine of MF Global fame, who still has yet to be charged with any negligence. Exhibit B is global banks that broke laws and barely were punished: Barclays et al. manipulated Libor, which affects interest rates on every level around the globe. How were the perpetrators punished? They were fined. Follow that with HSBC that for years laundered money for drug cartels and Middle East terrorists; it only received a slap on the wrist fine when compared to the revenues it made for its illegal deeds. This, as much as government malfeasance, angers me to the point that I’m ready to find some more reality relief, something to take me away from Congressional infighting, warring factions and horse trading. Hmm, maybe I’ll go see “Lincoln.”