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Fiscal cliff won’t go away

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by Peter Switzer

Who said the fiscal cliff fears are behind us? Well, it looked like it on Friday on Wall Street, but reality is biting back, albeit slowly, with the Dow down 42.31 points or 0.33 per cent to 12,967.37.

Meantime, the S&P 500 was down 0.2 per cent to 1406.29. The index is still in positive charts territory, but can it last?

This will depend on negotiations in Washington over the fiscal cliff issues, and who knows what will happen?

My suspicions are that we will see some tough talk from both sides that will lead to market dips, but as I say — who knows?

The problem is that Congress has been on a break and the market has ridden up, but now the optimism will be tested.

The positive run on the market has been linked to better than expected economic data, and so if an acceptable fiscal cliff solution can be constructed, then my belief in an end of year rally makes a lot of sense.

Consistent with this, the National Retail Federation reported 247 million shoppers visited stores and websites over the Black Friday weekend, up from 226 million last year. (CNBC)

Year on year, the long weekend sales were up 12.8 per cent, which underlines that 2012 is better than 2011.

For the rest of this week, there’s a swag of important economic data including GDP, house price data and a range of indicators that will cement or break the view that the US economy is indeed on the improve.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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Published on: Tuesday, November 27, 2012

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