COMMENTARY | COLUMNISTS | GEORGE CHAMBERLIN

George Chamberlin's Money in the Morning

The "Cliff-o-Meter" -- I came up with that all by myself -- is in positive territory this morning following comments by President Obama suggesting a deal will be reached in order to avoid sending the U.S. economy over the fiscal cliff in just 42 days. While visiting a temple in Thailand yesterday Obama was quoted as saying "We're going to need a lot of prayer for that," in reference to the cliff.

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The markets seem somewhat pleased with the rosier prospects for the agreement. Last week the Dow Industrials fell 1.8 percent and have now dropped for four weeks in a row and five of the last six weeks. However, this morning stocks are up triple digits -- 150 points on the Dow in the first half hour -- at the get go, thanks to a strong earnings report from home retailer Lowe's, among other things.

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There was an interesting announcement from Wal-Mart this morning that had nothing to do with holiday shopping. The company said it will pay its next quarterly dividend on Dec. 27, 2012. The payment date is being pushed forward from the originally announced date of Jan. 2, 2013. Although the press release from Wal-Mart doesn’t make any suggestion, this is obviously a move to make the payment before the fiscal cliff. The new date assures investors the dividend will be taxed at the current maximum rate of just 15 percent. If Congress fails to act on the fiscal cliff before the end of the dividend paid right after the New Year it would be taxed as ordinary income, more than double the current preferential tax rate for most people.

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The National Association of Realtors reported this morning sales of existing homes in October rose 2.1 percent to an annualized rate of 4.79 million units, down slightly from September but up 10.9 percent from the same month a year ago. Median home prices last month were up nationwide by 11.1 percent compared to October 2011. "Rising home prices have already resulted in a $760 billion growth in home equity during the last year. Given that each percentage point of price appreciation translates into an additional $190 billion in home equity, we could be close to a $1 trillion gain next year," said NAR economist Lawrence Yun. The report said sales rose 4.4 percent in the West in October and the median price jumped to $242,100, up 21.2 percent from October 2011.

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Another interesting report on residential real estate comes from Zillow which finds the percentage of homeowners with negative equity fell sharply in the third quarter to 28.2 percent from 30.9 percent in the previous three-month period. Here in San Diego the negative equity numbers fell from 33.9 percent in Q2 to 30.6 percent in the last quarter.

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Also out this morning is the latest reading on homebuilder confidence. The National Association of Home Builders reports its housing market index jumped this month to the highest point since May 2006. "Builders are reporting increasing demand for new homes as inventories of foreclosed and distressed properties begin to shrink in markets across the country," said chairman Barry Rutenberg.

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It seems every radio and TV report I hear about holiday shopping suggests consumers are scared silly and cut back on spending. Yet, every report coming across my desk suggests just the opposite. For instance, Americans are expected to spend $72.9 billion this season -- just on travel! That's up 12 percent from a year ago. The Allianz vacation confidence index explains that represents an increase of $7.7 billion from the holidays of 2011. Travel by car represents 59 percent of all vacation trips which explains why the two biggest annoying factors for motorists are GPS systems that mess up and constant bickering from backseat drivers.

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Another sign consumers are feeling more confident: credit card activity is on the rise. According to TransUnion, the average credit card balance per consumer rose 4.91 percent in the past year to $4,996. Also, the delinquency rate -- the 90 days or more past due -- ticked slightly higher to 0.75 percent, an amazingly low percentage. "With both delinquencies and debt levels remaining quite low relative to historical norms, we are confident in the continued stability of credit card usage patterns in the short term," said Ezra Becker of TransUnion.

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It must have been a long trip home for the Chargers from Denver yesterday. It was tough loss to the Broncos and pretty much eliminates the Bolts from winning the division. Of course, it is still possible they could make the playoffs as a wildcard. Seriously, it could still happen. Seriously, not kidding. Seriously.

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