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

 

Economic Update: RBNZ Says Rate Cut Seems Likely

The Reserve Bank will likely cut interest rates further as a persistently strong kiwi dollar makes it difficult for the bank to meet its inflation target, it said. The local currency fell. More>>

ALSO:

House Price Action Plan: RBNZ Signals National Lending Restrictions

The central bank wants to cap bank lending to property investors with a deposit of less than 40 percent at 5 percent and restore the 10 percent limit for owner-occupiers wanting to take out a mortgage with a deposit of less than 20 percent, according to a consultation paper released today. More>>

ALSO:

Sparks Fly: Gordon Campbell On China Steel Dumping Allegations

No doubt, officials on the China desk at MFAT have prided themselves on fashioning a niche position for New Zealand right in between the US and China – and leveraging off both of them! Well, as the Aussies would say, of MFAT: tell ‘em they’re dreaming. More>>

ALSO:

Loan Sharks: Finance Companies Found Guilty Of Breaching Fair Trading Act

Finance companies Budget Loans and Evolution Finance, run by former 1980s corporate high-flyer Allan Hawkins, have been found guilty of 106 charges of breaching the Fair Trading Act for misleading 21 borrowers while enforcing loan contracts. More>>

ALSO:

Post Panama Papers: Govt To Adopt Shewan's Foreign Trust Recommendations

The government will adopt all of the recommendations from former PwC chairman John Shewan to increase disclosure and introduce a register for foreign trusts with new legislation to be introduced next month. More>>

ALSO:

The Price Of Cheese: Cheddar At Eight-Year Low

Food prices decreased 0.5 percent in the year to June 2016, influenced by lower grocery food prices (down 2.3 percent), Statistics New Zealand said today. Compared with June 2015, cheese prices were down 9.5 percent, fresh milk was down 3.9 percent, and yoghurt was down 9.2 percent. More>>

ALSO:

Financial Advisers: New 'Customer-First' Obligations

Goldsmith plans to do away with the current adviser designations which he says have been "unsatisfactory" in that some advisers are obliged to disclose potential conflicts of interest and act in their customers' best interests, but others are not. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news