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Carlos Guillen

Quite impressively, equity markets are holding on to the modest gains made at the start of the trading session today. Not even the rather disturbing news from Italy has been able to bring the markets lower. Of course, as we all know at the moment, sustaining these gains will be dependent on what comes out of Washington with respect to the Fiscal Cliff dilemma.

As we all know by now, this past Sunday, President Barack Obama and House Speaker John Boehner gathered at the White House to discuss the Fiscal Cliff. However, yet again, there is nothing concrete that came out of that meeting other than a statement that "the lines of communication remain open." So the U.S. economy is still on its way to jump off the cliff, which according to the Congressional Budget Office, will put our economy in a recession in the first half of 2013.

On the topic of employment, it is apparent that the jobs backdrop has changed very little in November according to the Conference Board's employment index. The board said its November employment trends index fell just 0.02% to 107.82 from a revised 107.84 in October, first reported as 108.16, representing a year-over-year increase of 3.3%. Given that employment levels tend to lag changes in the economy, it would not be farfetched to see a decline in the employment backdrop if the economy contracts as many expected in the New Year.

On other news, according to a U.S. National Intelligence Council report, China's economy is likely to surpass the United States as the largest economy in the world in less than two decades, while Asia will overtake North America and Europe combined in global power by 2030. On a positive note, while global demand for energy is seen growing by 50% as populations and the middle class expand, the U.S. could become energy independent by 2030 as it taps new-found natural gas resources.

In all, trading volumes today have been rather light and major economic drivers have been absent, which tends to give little conviction that the gains made so far into the trading session will hold for the rest of the day.