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

 

Future Brighter Money: RBNZ Releases New Bank Note Designs

New Zealand’s banknotes are getting brighter and better, with the Reserve Bank today unveiling more vibrant and secure banknote designs which will progressively enter circulation later next year. More>>

ALSO:

Commerce: Supermarket Inquiry Finds No Breaches By Countdown

The Commerce Commission inquiry into anti-competitive behaviour by Countdown supermarkets, alleged by former Labour Party MP Shane Jones, has found nothing to warrant prosecution, although it warns supermarkets to take care in the way they communicate... More>>

ALSO:

Crown Accounts: English Flags ‘Challenge’ To Budget Surplus

Finance Minister Bill English is warning next month’s half yearly fiscal and economic update from the Treasury may not forecast a budget surplus, saying that returning the government’s accounts to surplus in 2015 will be “a challenge”, given the decline in commodity prices and weak global inflation. More>>

ALSO:

March 2015: Netflix To Launch In Australia And New Zealand

World’s Leading Internet Television Network to Offer Original Series, Movies, Documentaries, Stand-Up Comedy Specials and TV Shows for Low Monthly Price More>>

ALSO:

Price Of Cheese (Is Up): Dairy Product Prices Fall To Five-Year Low

Dairy product prices fell in the latest GlobalDairyTrade auction to the lowest level in more than five years, led by declines in rennet casein and skim milk powder. More>>

ALSO:

Gordon Campbell: On The Australians Scoring Trade Points Against Us With The Chinese

It hasn’t been a great year for Trade Minister Tim Groser... To top it off, Australia has just signed a FTA with China that has far better provisions on dairy exports than what New Zealand currently enjoys in our own FTA with China. More>>

ALSO:

Iwi & Local Consultation: Oil And Gas Block Offer 2015 Begins

Energy and Resources Minister Simon Bridges today announced the start of the Block Offer 2015 process for awarding oil and gas exploration permits. More>>

Industrial Action: Stats NZ Throwing Public Money Away Duplicating Data

The Public Service Association (PSA) says Statistics NZ are throwing money away by collecting the same data twice for official statistics such as the Consumer Price Index... As part of the ongoing industrial action, field interviewers who are PSA members are continuing to collect data, but are not sending it through to Statistics NZ. More>>

ALSO:

Other Stats:

Space: Rosetta's 'Philae' Makes Historic First Landing On A Comet

After more than a decade traveling through space, a robotic lander built by the European Space Agency has made the first-ever soft landing of a spacecraft on a comet. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

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