How many times are we expected to buy the Brooklyn Bridge? Congress has decided to postpone the debt ceiling debate until May while they work on spending cuts. But this time they are "really, really really, really" going to address the issue. Fat chance. How dumb do we look? I have a better idea, why don't they go into a room and work out the details of exactly what they think we should do in a comprehensive form and present their ideas to the voting public. Is that too much to ask? The argument at the moment is stuck on one side saying "we don't want to pay for the spending we have authorized until you guys cut entitlements" and the other side counters with "we aren't going to do that". So the solution is to delay the confrontation another three months and run to a 24 hours news network and explain how it is not their side's fault.

What is even more unbelievable is the financial press is acting like this time is different.

Same Old / Same Old Department:  According to a NY Times article this weekend three Senators who receive heavy contributions from drug maker AMGEN managed to insert a $500 million price break in the fiscal cliff resolution bill that will be paid for by higher cost for Medicare. So the next time you hear Max Bacus (D- Montana) or Orrin Hatch (R- Utah) or Mitch McConnell (R- Kentucky) talk about cutting the deficit or fiscal responsibility you will know they mean it for everybody but the drug company that owns them.

Like most Americans I am fed up with the Senate and the House of Representatives. Over the years they have passed spending bill after spending bill and now they want to debate whether or not we should pay for the programs they instituted. If they don't want to pay for them then they should cancel them. How hard is this? Don't try to sell me some nonsense about fiscal responsibility, if Congress were fiscally responsible we wouldn't be having this discussion. The country has bigger issues than a made for TV drama about the debt ceiling.

There are signs of intelligent life starting to emerge, even on Wall Street. The board of JP Morgan has reduced Jamie Dimon's comp because of the trading loss in London. It is difficult to feel bad for someone who has to struggle through the winter on only 11 million dollars but the fact that the London loss was his fault and it is recognized as such publicly is a step in the right direction.

The US economy feels a little sluggish which I believe is due to all the noise about the "cliff". I believe the real estate sector will continue to improve, the earning of major US companies will be fine and the private sector will expand as the recovery continues. Congress has just approved a 60 billion stimulus package in hurricane relief and any spending cuts that Congress manages to pass will be minor. It is almost like the current uproar about gun control will give the politicians in DC the perfect cover to avoid any real progress on the deficit. In an ideal situation, the recent minor tax increase combined with a minor reduction in government spending, plus an improving economy should create better deficits numbers by year end. Stay tuned.

On Monday December 31, 2012 I bought some call options on the S&P 500 (SPY) because in the midst of all the noise about the fiscal cliff I believed that Congress only cared about how bad they would look if they did nothing. I am pretty sure Congress doesn't think in terms of what is good for the country they only think about what is good for Congress. I thought that if they did something (anything) the stock market would react on the upside only because Congress wasn't totally dysfunctional. This morning I sold the options for a profit. I did it as soon as the market opened because I think once the markets realized how little the House and Senate managed to do the rally would fizzle pretty quickly. This is a pretty silly way to make investment decisions.

2013 will be a difficult year for the markets. I expect:

The political situation remains confused and contentious and rancorous and ineffective.

Bond yields will remain low but there will not be the price appreciation witnessed over the last few years.

Stocks should be everyone's first choice and if the politicians don't manage to kill the economy, equities could be in line for a solid year.

With low interest rates I expect the housing sector will continue to improve.

Private sector credit quality will continue to improve and municipal sector credit quality will continue to slide.

I think John Boehner is done as Speaker of the House