Bloomberg:
- U.S. House Passes Budget Bill. The 257-167 bipartisan vote breaks a yearlong impasse over how to head off $600 billion in tax increases and spending cuts set to begin taking effect today. The Senate passed the bill early this morning, 89-8, and it goes to President Barack Obama for his signature. The measure isn’t the grand bargain on deficit reduction lawmakers wanted when they created the tax-and-spending deadlines over the past three years. While it averts most of the immediate pain, it is only a small step toward controlling the federal deficit -- an issue that will return with a February fight over raising the $16.4 trillion debt limit.
- EU Power to Extend Slump in 2013 on Weak Demand: Energy Markets. The slump in European power that has driven prices to record lows is showing no sigh of ending as the region's second recession in four years curbs energy use. Electricity for the next year in Germany, Europe's biggest economy, will probably fall 9.2% in 2013, extending its 17% decline last year, according to Credit Suisse Group AG. Power demand in Germany will drop 2% this year, the same amount as in 2012, Bank of America Corp. said.
- Japan’s Population Falls by Record in 2012 as Births Decrease. Japan’s population last year declined by 212,000, the biggest drop on record, according to an estimate by the nation’s health ministry. That’s the largest reduction since the ministry started recording the data in 1947 and a sixth straight year of declines. The number of births fell by 18,000 to a record low of 1.03 million last year, the ministry said.
- Analysis: 77% of Households to See Tax Increase. The fiscal cliff bill’s impact would be far-reaching for American taxpayers, and particularly painful for very high-income households, according to a new analysis. About 77% of American households would see a tax increase compared to their 2012 tax levels, according to the analysis by the Tax Policy Center, a joint venture of the Brookings Institution and the Urban Institute. The biggest impact for most households comes from the expiration of a two-percentage-point payroll-tax break that existed for 2011 and 2012. It basically hits all working people.
- GOP Conservatives Blast Terms of Deal. Majority Leader Cantor Joins Back Benchers in Decrying Lack of Spending Cuts in Bill Passed Earlier by the Senate. The episode served as another reminder of just how tempestuous Mr. Boehner's House majority has become.
- Obama's Tax Bill Comes Due. The headlines say the Senate has passed a bill to avoid the tax cliff, hallelujah. This is the way to look at it if you have a pre-Copernican view of politics where Washington is the center of the economic universe. The better way to see it is that the tax bill on the private, productive part of the economy is now coming due for President Obama's first-term spending and re-election.
- David Malpass: Nothing Is Certain Except More Debt and Taxes. The Senate fiscal-cliff bill still means higher taxes on every working American. So much for just going after 'the rich.'
- Chinese Fly Cash West, by the Suitcase. Amid a rush of newly affluent Chinese eager to move money out of China, U.S. and Canadian border officials are seizing large amounts of cash tucked into wallets, purses and suitcases at airports across North America. Officials at Canada's two busiest airports—Toronto and Vancouver—seized around 12.9 million Canadian dollars ($13.0 million) in undeclared cash from Chinese nationals from April 2011 through early June 2012, according to documents provided to The Wall Street Journal by the Canada Border Services Agency. The money, most of it returned to the owners, represented 59% of all cash seized at the airports in the period, according to the data. In the U.S., Chinese citizens are the top source of airport cash seizures after Americans.
- Companies Prepare for Health Law. With Much of the U.S. Overhaul to Take Effect in a Year, Companies Weigh Employee-Benefit Options. Certain employers could see health-related costs go up as a result of the law's requirements, and they are weighing how to respond. One possibility would be to opt out of providing health coverage altogether, as employees will have new coverage options outside the workplace—for the employer, the penalties are lower than the typical cost of insurance.
- Banks Near Foreclosure Settlement. Lenders and Regulators Working Toward $10 Billion Pact After Concerns Raised Over Review Process.
Business Insider:
- Ladies And Gentlemen: Here's The Date Of Your Next Fiscal Cliff. The other half of the Fiscal Cliff, the sequester (the mandatory spending cuts agreed to in the debt ceiling fight) has only been delayed, giving DC more time to fight over it. That means we've already scheduled a new Fiscal Cliff, and the bill agreed to last night has the date: March 1, 2013 (exactly two months from today).
NY Times:
CNN:- Investors Face Imminent Obstacles, With or Without a Fiscal Deal. Economists forecast that the Senate deal would reduce economic growth by as much as 1 percent in the first quarter of 2013.
- Tech Giants Brace for More Scrutiny From Regulators. Silicon Valley lobbied hard in Washington in 2012, and despite some friction with regulators, fared fairly well. In 2013, though, government scrutiny is likely to grow. And with this scrutiny will come even greater efforts by the tech industry to press its case in the nation’s capital and overseas.
- Hedge fund industry loses out again. Bearish hedge fund managers have lost out in 2012, with the $2tn industry suffering another year of disappointing returns as traders were wrongfooted by a change in fortunes for the eurozone. According to Hedge Fund Research, slight gains in December were likely to mean the average hedge fund manager made just more than 5 per cent over the year -- a period watched closely by many investors after disappointing returns in 2011, when the average hedge fund lost 5 per cent. Flows into the industry are also expected to have slowed markedly, hit by a wave of high-profile closures. The first 9 months of last year saw hedge funds pull in a net $30bn from investors, compared with $70bn in 2011.
naked capitalism:
- Eight Corporate Subsidies in the Fiscal Cliff Bill, From Goldman Sachs(GS) to Disney(DIS) to NASCAR. Throughout the months of November and December, a steady stream of corporate CEOs flowed in and out of the White House to discuss the impending fiscal cliff. Many of them, such as Lloyd Blankfein of Goldman Sachs, would then publicly come out and talk about how modest increases of tax rates on the wealthy were reasonable in order to deal with the deficit problem. What wasn’t mentioned is what these leaders wanted, which is what’s known as “tax extenders”, or roughly $205B of tax breaks for corporations.
- Cliff Deal: Half of Tax Hikes Go to Boost Spending. As more details emerge about the Senate's hastily-passed deal to avert the "fiscal cliff", the scale of the GOP's capitulation grows more troubling. This morning, it looked as if the Senate GOP had overwhelmingly voted for a $620 Billion tax increase in exchange for almost no real spending cuts. That's bad enough, but an analysis by the Congressional Budget Office reveals that the deal actually contains $330 Billion in new spending over the next 10 years. More than half of the new tax revenue won't go to plugging the deficit, but increasing the size of government.
- New Year means tax increases to pay for health care law. The
tax man is coming in 2013. And he’s wearing surgical scrubs and has a
stethoscope around his neck. Five new tax increases take effect on Jan. 1
to help pay for the nation’s health care overhaul.
- Stunning Graphic Shows Possible Reason The House GOP Is Balking At Senate’s Fiscal Cliff Bill. This graphic is worth much more than 1000 words.
- Senate's "fiscal cliff" bill adds $4 trillion to deficits: CBO. The Congressional Budget Office on Tuesday said Senate-passed legislation to avert the "fiscal cliff" would add nearly $4 trillion to federal deficits over a decade, largely because it would extend low tax rates for almost all Americans. The congressional scorekeeper's analysis was released as a number of Republicans in the House of Representatives voiced opposition to the bill, and considered amending it with deeper spending cuts. House Majority Leader Eric Cantor and others complained the bill's spending cuts would do little to curb trillion-dollar deficits.
- US regulators – with long arms. Miscreants in far-flung corners of the globe dread the US military’s unmanned drones. European banks with US links, meanwhile, live in dread of Uncle Sam’s regulators.
- Small US fiscal cliff deal will deliver more subpar growth. The crucial thing about the $600bn-plus tax increases and spending cuts that were scheduled to come into force on January 1 is that the US economy was actually facing two cliffs, not one.
- Europe to Intervene on U.K. Bank Accounting Rules. EU Commissioner Michel Barnier sanctions review of IFRS to start early this year, citing a letter from Barnier's cabinet to investors who demanded the inquiry.
- Goldman Sachs(GS) chief Lloyds Blankfein cashes in $4m of shares. Goldman Sachs chief executive Lloyd Blankfein and departing chief financial officer David Viniar both exercised restricted stock units on New Year's Eve that delivered them $4.2m in cash apiece.
- Japan plans 'nationalisation' of factories to save industry. Japan's government is to take the unprecedented step of buying factories and machinery directly with taxpayer funds, the latest in a series of radical steps to lift the country out of its deep slump. Premier Shenzo Abe is to spend up to one trillion yen (£7.1bn) buying plant in the electronics, equipment, and carbon fibre industries to force the pace of investment, according to Nikkei news. The disclosure came just a day after Mr Abe vowed to revive Japan's nuclear industry with a fresh generation of reactors, insisting that they would be "completely different" from the Fukishima Daiichi technology.
- The U.K. economy may stall with little or no growth in 2013, citing the Institute for Public Policy Research. The Institute says consumer and business morale has been dampened by talk of years of austerity and the crisis in the euro-region.
- Economy Minister Philipp Roesler says German economic growth may slow further in 2013, citing an interview. "2013 won't be an easy year for our economy," he said.
- None of note
- Asian equity indices are -.25% to +1.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 113.25 +.75 basis point.
- Asia Pacific Sovereign CDS Index 85.75 -2.5 basis points.
- FTSE-100 futures n/a.
- S&P 500 futures n/a.
- NASDAQ 100 futures n/a.
Earnings of Note
Company/Estimate
- None of note
8:58 am EST
- Final Markit US PMI for December is estimated to rise to 53.6 versus a prior estimate of 52.8.
- Construction Spending for November is estimated to rise +.6% versus a +1.4% gain in October.
- ISM Manufacturing for December is estimated to rise to 50.4 versus a reading of 49.5 in November.
- ISM Prices Paid for December is estimated to fall to 50.8 versus 52.5 in November.
- None of note
- The US fiscal cliff negotiations, Eurozone Manufacturing PMI, UK Manufacturing PMI and the weekly retail sales reports could also impact trading today.
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