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

 


World Week Ahead: D-day on fiscal cliff

World Week Ahead: D-day on fiscal cliff

By Margreet Dietz

Dec. 31 (BusinessDesk) – American budget talks have come down to the wire.

The largest stumbling block remains disagreement between Democrats and Republicans over the annual income threshold that will separate those who will see an extension in tax cuts and those who will not.

Congress has until Monday midnight to reach an agreement that will avoid tax increases and spending cuts.

"I was modestly optimistic yesterday, but we don't yet see an agreement," President Barack Obama told NBC's Meet the Press in an interview taped on Saturday, airing on Sunday. "And now the pressure's on Congress to produce."

"If Congress came out and said that everything is off the table, yeah, that would be a short-term shock to the market, but that's not likely," Richard Weiss, a Mountain View, California-based senior money manager at American Century Investments, told Reuters. "Things will be resolved, just maybe not on a good time table. All else being equal, we see any further decline as a buying opportunity."

To be sure, lawmakers and White House officials also were preparing for the prospect of no deal until after January 1, and having to seek one in the new Congress that convenes on January 3, according to Bloomberg News.

The budget talks have taken the limelight from another problem: US government borrowing is approaching the debt ceiling, the maximum amount it can borrow. Last week Treasury Secretary Tim Geithner told Congress in a letter he was taking "extraordinary measures" to avoid a default, as the US was poised to reach the ceiling on December 31.

"I think there will be a tremendous fight between Democrats and Republicans about the debt ceiling," Jon Najarian, a co-founder of online brokerage TradeMonster.com, in Chicago, told Reuters. "I think that is the biggest risk to the downside in January for the market and the US economy."

In the past five days, the Dow Jones Industrial Average and the Standard & Poor's 500 Index each shed 1.9 percent, while the Nasdaq Composite Index dropped 2 percent.

On Tuesday, markets will be closed for the New Year's holiday. Many European markets are closed on Monday too. Among the key markets, the FTSE 100 and CAC 40 are open on December 31; the DAX is now closed for the calendar year.

Investors paid little attention to upbeat US data released on Friday, carrying on the positive trend seen in the fourth quarter. Pending home sales in the US advanced for a third straight month in November, while business activity as measured by the MNI Chicago Report climbed to the highest in four months.

"There is nothing here to suggest that the economy has enough momentum to withstand the shock if we go over the fiscal-cliff with no quick return," John Ryding, chief economist at RDQ Economics in New York, told Reuters. "The good news right now is it looks like we could have the mid-twos kind of GDP [growth] for the fourth quarter."

Economic indicators released in the coming days include the PMI and ISM manufacturing indexes, both due on Wednesday, and the monthly employment report on Friday.

Payrolls rose by 150,000 workers after a 146,000 gain in November, according to the median forecast of 54 economists surveyed by Bloomberg. The unemployment rate may have held at 7.7 percent, the lowest since December 2008.

On Wednesday, minutes from the latest meeting of the Federal Reserve's policy-making committee will also be released.

In Europe, the benchmark Stoxx 600 Index shed 0.8 percent last week. While optimism is starting to return to the region, the cost of financially rescuing its weakest links – Ireland, Portugal, Spain and Greece – continues to impact the strongest economy, Germany.

German gross domestic product, which grew 4.2 percent in 2010 and 3 percent in 2011, is forecast to expand a mere 0.9 percent in 2012.

Dieter Hundt, leader of Germany's employer association, told Reuters that Germany will avoid recession in 2013. "I'm expecting that we won't experience recession in Germany next year and the economy will once again grow at similar levels as this year," Hundt said.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Sky City : Auckland Convention Centre Cost Jumps By A Fifth

SkyCity Entertainment Group, the casino and hotel operator, is in talks with the government on how to fund the increased cost of as much as $130 million to build an international convention centre in downtown Auckland, with further gambling concessions ruled out. The Auckland-based company has increased its estimate to build the centre to between $470 million and $530 million as the construction boom across the country drives up building costs and design changes add to the bill.
More>>

ALSO:

RMTU: Mediation Between Lyttelton Port And Union Fails

The Rail and Maritime Union (RMTU) has opted to continue its overtime ban indefinitely after mediation with the Lyttelton Port of Christchurch (LPC) failed to progress collective bargaining. More>>

Earlier:

Science Policy: Callaghan, NSC Funding Knocked In Submissions

Callaghan Innovation, which was last year allocated a budget of $566 million over four years to dish out research and development grants, and the National Science Challenges attracted criticism in submissions on the government’s draft national statement of science investment, with science funding largely seen as too fragmented. More>>

ALSO:

Scoop Business: Spark, Voda And Telstra To Lay New Trans-Tasman Cable

Spark New Zealand and Vodafone, New Zealand’s two dominant telecommunications providers, in partnership with Australian provider Telstra, will spend US$70 million building a trans-Tasman submarine cable to bolster broadband traffic between the neighbouring countries and the rest of the world. More>>

ALSO:

More:

Statistics: Current Account Deficit Widens

New Zealand's annual current account deficit was $6.1 billion (2.6 percent of GDP) for the year ended September 2014. This compares with a deficit of $5.8 billion (2.5 percent of GDP) for the year ended June 2014. More>>

ALSO:

Still In The Red: NZ Govt Shunts Out Surplus To 2016

The New Zealand government has pushed out its targeted return to surplus for a year as falling dairy prices and a low inflation environment has kept a lid on its rising tax take, but is still dangling a possible tax cut in 2017, the next election year and promising to try and achieve the surplus pledge on which it campaigned for election in September. More>>

ALSO:

Job Insecurity: Time For Jobs That Count In The Meat Industry

“Meat Workers face it all”, says Graham Cooke, Meat Workers Union National Secretary. “Seasonal work, dangerous jobs, casual and zero hours contracts, and increasing pressure on workers to join non-union individual agreements. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news