Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

World Week Ahead: Can Santa bring budget deal?

World Week Ahead: Can Santa bring budget deal?

By Margreet Dietz

Dec 24 (BusinessDesk) – The focus on this holiday-shortened week on both sides of the Atlantic will remain keenly on the attempts to reach a US budget deal after talks ground to a halt.

There is just one week left to find a compromise acceptable to both Democrats and Republicans and prevent US$600 billion of tax increases and spending cuts that would probably tip the world's largest economy into recession in 2013.

Still, optimism remains that President Barack Obama and House Speaker John Boehner will succeed.

"The markets still basically believe that something will be done," Sandy Lincoln, chief market strategist at BMO Asset Management US in Chicago, told Reuters.

Obama, too, believes something can still be done.

A plan can be achieved “whether it happens all at once or whether it happens in several different steps,” the president said at the White House on Friday, according to Bloomberg News. “Call me a hopeless optimist, but I actually still think we can get it done.”

After Boehner's failure to convince his own Republican colleagues to support a tax increase on individuals earning more than US$1 million, Obama said Congress should move forward on a narrower agreement that at least holds tax rates steady for 98 per cent of Americans, leaving the most politically divisive issues to be debated in the New Year.

US Treasuries received a boost on Friday, however, from the increased suspense.

“There may be a last-minute deal, but there has been a notable increase in risk in the markets,” Adrian Miller, director of fixed-income strategies in New York at GMP Securities, told Bloomberg.

The House and Senate are on break until Thursday, perhaps giving both Democrats and Republicans time to rethink their positions.

Data released this week will offer fresh clues on the American housing market, which has shown promising signs of a sustained recovery, through the S&P Case-Schiller Home Price Index on Wednesday, New Home Sales on Thursday, and the Pending Home Sales Index on Friday.

Other reports due in the coming days include Consumer Confidence on Thursday and Chicago PMI on Friday.

Trading volume on Wall Street is expected to be low this holiday-shortened week. Markets close early on Monday and are closed on Tuesday for Christmas Day.

"I'm guessing it's going to be a low volume week. There's not a whole lot other than the fiscal cliff that is going to continue to take the headlines," Joe Bell, senior equity analyst at Schaeffer's Investment Research, in Cincinnati, told Reuters.

In the past five days, the Dow Jones Industrial Average gained 4 percent, the Standard & Poor's 500 Index rose 1.2 percent and the Nasdaq Composite Index climbed 1.7 percent.

Last week, the benchmark Stoxx Europe 600 Index gained 0.6 percent. Mario Monti, who resigned as Italian prime minister on Friday after parliament approved his government's budget for next year, is expected to clarify his future plans as early as Sunday. After initially saying he wouldn't run for office, Monti more recently appears to have been in campaign mode. EU leaders are keen for Monti -- or at least the reforms he's initiated -- to remain firmly in place.

Meanwhile, the Japanese yen extended its weakness against the greenback, dropping 0.9 percent for the week to 84.24 yen per US dollar, as the newly-elected Shinzo Abe and his Liberal Democratic Party raised the spectre of further monetary easing.

"We are eventually heading toward 100 in [US] dollar-yen and maybe the other side of it -- that’s how significant this sea change in Japan is,” Andrew Wilkinson, chief economic strategist at Miller Tabak in New York, told Bloomberg. “People will still believe that something has to give with the fiscal-cliff debate. I am still banking on strong US growth next year.”

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Superu Report: Land Regulation Drives Auckland House Prices

Land use regulation is responsible for up to 56 per cent of the cost of an average house in Auckland according to a new research report quantifying the impact of land use regulations, Finance Minister Steven Joyce says. More>>

ALSO:

Fletcher Whittled: Fletcher Dumps Adamson In Face Of Dissatisfaction

Fletcher Building has taken the unusual step of dumping its chief executive, Mark Adamson, as the company slashed its full-year earnings guidance and flagged an impairment against Australian assets. More>>

ALSO:

No More Dog Docking: New Animal Welfare Regulations Progressed

“These 46 regulations include stock transport, farm husbandry, companion and working animals, pigs, layer hens and the way animals are accounted for in research, testing and teaching.” More>>

ALSO:

Employment: Most Kiwifruit Contractors Breaking Law

A Labour Inspectorate operation targeting the kiwifruit industry in Bay of Plenty has found the majority of labour hire contractors are breaching their obligations as employers. More>>

ALSO:

'Work Experience': Welfare Group Opposes The Warehouse Workfare

“This programme is about exploiting unemployed youth, not teaching them skills. The government are subsidising the Warehouse in the name of reducing benefit dependency,” says Vanessa Cole, spokesperson for Auckland Action Against Poverty. More>>

ALSO:

Internet Taxes: Labour To Target $600M In Unpaid Taxes From Multinationals

The Labour Party would target multinationals operating in New Zealand to ensure they don't avoid paying tax if it wins power and is targeting $600 million over three years through a "diverted profits tax," says leader Andrew Little. More>>

ALSO: