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Fiscal Cliff Looming Large

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Six some-odd weeks before the end of calendar year 2012, many questions we were concerned about not having answers to have been answered. Still others -- arguably bigger questions -- have yet to see resolution. For example, we now know who has been elected president for the next four years, but the fate of the Fiscal Cliff remains hanging in the balance.

Futures are up this morning, but that seems to have lots more to do with attractive entry points in the markets following the worst week of trading since June. Though Q3 earnings season continues, we have already articulated how (un)successful it has been, with most of the biggest S&P 500 companies already having reported. What remains are mostly the Retailers, but obviously what happens next quarter is what most investors are interested in with this industry.

Overseas, we have some relatively good news from China and Greece. China reported improvements in trade and exports, while Greece has passed its "austerity budget," which is expected to allow international creditors to loan the country funds to keep it from bankruptcy.

Homebuilder D.R. Horton (DHI - Free Report) beat EPS estimates by a couple cents on increased year-over-year revenues. Obviously this is good news, especially regarding how traction in housing affects so much of the U.S. economy, from mortgage banks to lumber companies to appliance stores. But companies like Horton are working off very low bars year over year. That said, Beazer Homes (BZH - Free Report) reported a larger-than-expected fiscal 4th quarter loss, so we may read this as improvements in the homebuilding industry remaining a work in progress.

But it's the Fiscal Cliff investors are looking at. There is lip service being paid on both sides of the congressional aisle that it is a major concern and a top priority to being solved. However, until it is, expect the markets to tread lightly.

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