Eagle Eye Opener: Fiscal Cliff Imminent; Bonds to Bust in 2013?; Housing Prices up

Optimism in Short Supply Worldwide with Fiscal Cliff Imminent (Bloomberg)

As President Obama and Republicans returned to work this week, there isn’t a lot of investor optimism worldwide that an agreement will be reached before the January 1, 2013, deadline for many fiscal cliff changes. Far East markets were mixed with Japan’s Nikkei and Hong Kong’s Hang Seng up .91% and .35%, respectively. The Shanghai Composite lost .60% today. In Europe, the major markets moved up slightly, with the FTSE 100 gaining .32%, France’s CAC 40 rising .60% and Germany’s DAX rising .32%, as well. The sentiment here at home was slightly more dour, with the DJIA and S&P 500 index futures up slightly while the Nasdaq futures will open down.

Bonds to Burst in 2013? (CNBC.com)

While the steady march toward the fiscal cliff continues and higher taxes and less government spending go on unabated, investors may be thinking the January 1, 2013, deadline will be more akin to the Y2K non-event than a market-busting catastrophe. Lipper reports that in December, investors moved more than $8 billion into stock-based mutual and exchange-traded funds, while bonds took in less than $1 billion. This reverses the 2012 trend which saw bonds receive around $250 billion in funds and equities lose $130 billion. Whether this movement is indicative of an investor-driven bull in 2013, in the face of fiscal cliff changes — only time will tell.

Housing Prices up for Nine Straight Months (Reuters)

According to the S&P/Case Shiller composite index of 20 metropolitan areas, single-family home prices rose this past October — marking the ninth straight month in a row of appreciation. The .7% rise in October exceeded Reuters’ estimates of .5%. Part of the reason for continued growth stems from a slight improvement in the employment situation in the United States and record-low mortgage rates. However, analysts caution that home prices will still feel downward pressure in the coming year from an increase in sales of foreclosed and distressed properties and a resultant reduction in buyers and investors. Of course, fiscal cliff repercussions may have something to say as well…