Quick... everyone asked surprise that a deal was reached at the last moment. Clap like seals at the bipartisan action as our leaders join hand in hand to do what is in the best interest of the country. What a shocker.
S&P futures are up 18 points; I figured we'd get 2% on the surprise announcement, but we still have tomorrow morning to be even more 'surprised' and drive futures up more. This is why I expected a late day covering by shorts going into the weekend, but it happened much earlier in the day Friday than expected.
I'd expect most of the cuts in the initial $1T to be a bunch of phony accounting maneuvers (which baseline can we use? the one that results in the least amount of 'actual' money being cut), and then a lot of wrangling over the additional $2T late this fall.
Then we can begin anew in early 2013. But I still expect a tax cut (hey it's an election year coming up) this winter (along with QE2) - of course the tax cut will add to the deficit but don't worry about it. The can has been kicked, and it's only money after all.