NEW YORK, Dec. 11 (Reuters) - Following is the view from editors in the Americas on the top stories for the week ahead:
HIGHLIGHTS:
* TAX CUTS: Congress expected to vote in coming week
* FINANCIAL REGULATION: New rules on bank capital, swaps
* FED MEETING: No new bond buying, but watch economic outlook
* EARNINGS: Peek at holiday sales from Fedex, Best Buy
Watch the weekahead on Reuters Insider
http://link.reuters.com/jah69qTV
VOTE ON U.S. TAX CUTS:
The tax-cut package under debate in the U.S. Senate may face a test vote on Monday. For industry, one of its many provision is that it would extend through 2011 the 45 cent a gallon ethanol tax credit and a 54 cent tariff on imported ethanol -- the two major supports for the biofuels sector. Passage in the Senate looks likely, but President Barack Obama is trying to bring angry House Democrats on board. They want higher taxes for the richest Americans. Obama has recruited the help of former President Bill Clinton, a veteran of budget showdowns and known for his persuasive powers to rally support. The one compromise to get the measure through this Congress before it wraps up business and hands over to the newly elected, Republican-strengthened Congress in 2011, may be to compromise on inheritance taxes. No date has been set for action in the U.S. House of Representatives on the package, estimated to cost $858 billion over 10 years. Meanwhile, President Barack Obama on Friday called for Congress to consider simplifying the byzantine U.S. tax code next year -- one way to start addressing concerns over fairness in the tax code.
Take-a-Look- Tax cuts, deficits and debt
NEW FINANCIAL RULES
It's a heavy week for financial regulation in Washington. On Tuesday, the Federal Deposit Insurance Corp. board discusses risk-based capital standards for banks. On Wednesday, the Securities and Exchange Commission considers proposals to improve disclosures around minerals mined in conflict zones, such as 'blood' diamonds. On Thursday, the Commodities Futures Trading Commission will propose speculative position limits for energy and metals markets, which for energy and metals traders is the most contentious aspect of its broadened mandate under the Dodd-Frank financial reform bill. The CFTC looks increasingly like to take a phased approach and err on the light size as it still grapples with gathering data on the size of the swaps market that it must also oversee, but it may now be emboldened by the European Commission's recent proposal to impose similar measures. The question will be whether industry officials feel the rules - particularly the CFTC's treatment of hedging vs speculative positions - are so tight that they choke off some of the billions of dollars flooding into energy, metals and agricultural markets. The Federal Reserve board discusses proposed limits on fees that financial firms can charge retailers for debit card transactions. Finally, on Friday, comments are due on the SEC proposed rule to compensate whistleblowers for tips that lead to a successful enforcement case.
ALL QUIET AT THE FED
The U.S. Federal Reserve is not expected to signal any shift away from its $600 billion program to buy government debt when it meets on Tuesday. But it will consider the economic impact of Obama's unexpected deal on tax cuts, which would deliver an effective two-year fiscal stimulus on top of the Fed's sizable monetary stimulus. The combined jolt to an economy growing at a sub-par rate is causing some analysts to revise upward their GDP growth forecasts for next year by as much as one percentage point to above 4 percent. While the central bank's post-meeting statement could nod to signs the recovery is strengthening, officials may be hesitant to offer any clue as to whether it could curtail the bond program. Also to be factored into its meeting is a Tuesday report on retail sales, which is expected to show a fifth straight monthly gain, but the dollar measure will be tempered because of heavy discounting at stores. Other U.S. data this week include consumer inflation, which is seen in check, industrial production is expected to expand and weekly jobless claims may continue to improve.
In Canada, Bank of Canada Governor Mark Carney's speech on the economic outlook on Monday may offer hints on how deep into 2011 he will resume his stalled rate hike campaign given the economy's decelerating growth. The Canadian currency has struggled to return to dollar parity after the Bank of Canada statement accompanying its Dec. 7 interest-rate announcement proved more dovish than expected Fed preview story U.S. economic data
BULLISH STOCK SIGNALS
A recent string of stronger data and technically bullish signals have suggested to analysts that the stock market is likely to rally through the end of the year after some consolidation. 'When you violate resistance, there's a tendency for it to really go' higher,' said Chris Burba, a short-term market technician at Standard & Poor's. Noting a bullish sign for the S&P 500, he added that 'surpassing 1,227-1,229 is important ... basically telling you the crowd is willing to buy (stocks) at higher prices.' Data from Thomson Reuters Datastream suggests a 12-month forward price-to-earnings ratio of 12 times for the all-country index. It compares with a 10-year average of 15.
'The equity risk premium is so high, it's easy for equities to go up and we have at least 20 percent more to look forward to in the next year or two,' Jim O'Neill, chairman of Goldman Sachs Asset Management, said. The week ahead though could bring stagnation for equities at a time when volatility has collapsed; Friday's options expiration might be the last red-letter event before year-end shutdown.
In fixed income, a brutal sell-off last week may have run its course for now. It remains unclear whether it represents turnaround in sentiment or a brief decline in the context of a still-simmering bull market. The dollar remains in line for better gains ahead, reacting now to rising yields that support it.
Wall Street Weekahead
Treasuries Weekahead
Global Markets weekahead
PEEK AT HOLIDAY SALES
Earnings reports from FedEx, world's largest cargo airline, and electronics retailer Best Buy will give investors an opportunity to take the pulse of both global businesses and Main Street shoppers. With the U.S. economy slowly mending, FedEx in September boosted its earnings forecast for the year ending next May, citing an expected rise in holiday season shipments. It reports on Thursday and the market is likely to be curious about its employment plans, after rival United Parcel Service said it would hire about 50,000 seasonal workers to handle the increased holiday season volume. At the same time Best Buy, which reports on Tuesday, seems to have seen a strong start to the holiday season, but the question is whether November sales came at the expense of the retailer's margins. Early-bird discounts in late November drew hordes of people to retailers like Best Buy. Wall Street has priced in a profit of 61 cents per share, up from 53 cents per share one year ago.
Oracle, the world's No. 3 software maker, spells out its financial report on Thursday nearly a month ahead of other major tech companies -- a kind of sneak peek into the health of the tech industry. Watch for whether it can extends last quarter's surge in software sales, which generate long-term maintenance contracts and signal future profitability. They may also be eager to hear any comments about the Oracle and SAP's three-week courtroom drama that captivated Silicon Valley as a slew of high-profile executives testified. SAP was ordered to pay Oracle $1.3 billion for software theft in a jury verdict that could be the largest-ever for copyright infringement.
Blackberry-maker Research in Motion also reports on Thursday, but its fortune is less clear and it gets a chance to explain whether or not Apple has overtaken RIM. The focus will be on the high-end Torch phone and upcoming PlayBook tablet, which may serve as a strong complement in business markets to BlackBerry service. Since Apple kicked off the market with its popular iPad tablet earlier this year, rivals have been rushing to get tablets to market. The PlayBook is due is early 2011. 'There is interest (in PlayBook), but until there's more information available and they have the opportunity to try the product, it's a little early to tell,' RIM's markets President, Paget Alves said.
TAKE A LOOK-Weekahead from Reuters Editors
Five world markets themes next week
For all diaries
Keywords: WEEKAHEAD/AMERICAS (Editing by Stella Dawson, +1 646 223 6102) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
HIGHLIGHTS:
* TAX CUTS: Congress expected to vote in coming week
* FINANCIAL REGULATION: New rules on bank capital, swaps
* FED MEETING: No new bond buying, but watch economic outlook
* EARNINGS: Peek at holiday sales from Fedex, Best Buy
Watch the weekahead on Reuters Insider
http://link.reuters.com/jah69qTV
VOTE ON U.S. TAX CUTS:
The tax-cut package under debate in the U.S. Senate may face a test vote on Monday. For industry, one of its many provision is that it would extend through 2011 the 45 cent a gallon ethanol tax credit and a 54 cent tariff on imported ethanol -- the two major supports for the biofuels sector. Passage in the Senate looks likely, but President Barack Obama is trying to bring angry House Democrats on board. They want higher taxes for the richest Americans. Obama has recruited the help of former President Bill Clinton, a veteran of budget showdowns and known for his persuasive powers to rally support. The one compromise to get the measure through this Congress before it wraps up business and hands over to the newly elected, Republican-strengthened Congress in 2011, may be to compromise on inheritance taxes. No date has been set for action in the U.S. House of Representatives on the package, estimated to cost $858 billion over 10 years. Meanwhile, President Barack Obama on Friday called for Congress to consider simplifying the byzantine U.S. tax code next year -- one way to start addressing concerns over fairness in the tax code.
Take-a-Look- Tax cuts, deficits and debt
NEW FINANCIAL RULES
It's a heavy week for financial regulation in Washington. On Tuesday, the Federal Deposit Insurance Corp. board discusses risk-based capital standards for banks. On Wednesday, the Securities and Exchange Commission considers proposals to improve disclosures around minerals mined in conflict zones, such as 'blood' diamonds. On Thursday, the Commodities Futures Trading Commission will propose speculative position limits for energy and metals markets, which for energy and metals traders is the most contentious aspect of its broadened mandate under the Dodd-Frank financial reform bill. The CFTC looks increasingly like to take a phased approach and err on the light size as it still grapples with gathering data on the size of the swaps market that it must also oversee, but it may now be emboldened by the European Commission's recent proposal to impose similar measures. The question will be whether industry officials feel the rules - particularly the CFTC's treatment of hedging vs speculative positions - are so tight that they choke off some of the billions of dollars flooding into energy, metals and agricultural markets. The Federal Reserve board discusses proposed limits on fees that financial firms can charge retailers for debit card transactions. Finally, on Friday, comments are due on the SEC proposed rule to compensate whistleblowers for tips that lead to a successful enforcement case.
ALL QUIET AT THE FED
The U.S. Federal Reserve is not expected to signal any shift away from its $600 billion program to buy government debt when it meets on Tuesday. But it will consider the economic impact of Obama's unexpected deal on tax cuts, which would deliver an effective two-year fiscal stimulus on top of the Fed's sizable monetary stimulus. The combined jolt to an economy growing at a sub-par rate is causing some analysts to revise upward their GDP growth forecasts for next year by as much as one percentage point to above 4 percent. While the central bank's post-meeting statement could nod to signs the recovery is strengthening, officials may be hesitant to offer any clue as to whether it could curtail the bond program. Also to be factored into its meeting is a Tuesday report on retail sales, which is expected to show a fifth straight monthly gain, but the dollar measure will be tempered because of heavy discounting at stores. Other U.S. data this week include consumer inflation, which is seen in check, industrial production is expected to expand and weekly jobless claims may continue to improve.
In Canada, Bank of Canada Governor Mark Carney's speech on the economic outlook on Monday may offer hints on how deep into 2011 he will resume his stalled rate hike campaign given the economy's decelerating growth. The Canadian currency has struggled to return to dollar parity after the Bank of Canada statement accompanying its Dec. 7 interest-rate announcement proved more dovish than expected Fed preview story U.S. economic data
BULLISH STOCK SIGNALS
A recent string of stronger data and technically bullish signals have suggested to analysts that the stock market is likely to rally through the end of the year after some consolidation. 'When you violate resistance, there's a tendency for it to really go' higher,' said Chris Burba, a short-term market technician at Standard & Poor's. Noting a bullish sign for the S&P 500, he added that 'surpassing 1,227-1,229 is important ... basically telling you the crowd is willing to buy (stocks) at higher prices.' Data from Thomson Reuters Datastream suggests a 12-month forward price-to-earnings ratio of 12 times for the all-country index. It compares with a 10-year average of 15.
'The equity risk premium is so high, it's easy for equities to go up and we have at least 20 percent more to look forward to in the next year or two,' Jim O'Neill, chairman of Goldman Sachs Asset Management, said. The week ahead though could bring stagnation for equities at a time when volatility has collapsed; Friday's options expiration might be the last red-letter event before year-end shutdown.
In fixed income, a brutal sell-off last week may have run its course for now. It remains unclear whether it represents turnaround in sentiment or a brief decline in the context of a still-simmering bull market. The dollar remains in line for better gains ahead, reacting now to rising yields that support it.
Wall Street Weekahead
Treasuries Weekahead
Global Markets weekahead
PEEK AT HOLIDAY SALES
Earnings reports from FedEx, world's largest cargo airline, and electronics retailer Best Buy will give investors an opportunity to take the pulse of both global businesses and Main Street shoppers. With the U.S. economy slowly mending, FedEx in September boosted its earnings forecast for the year ending next May, citing an expected rise in holiday season shipments. It reports on Thursday and the market is likely to be curious about its employment plans, after rival United Parcel Service said it would hire about 50,000 seasonal workers to handle the increased holiday season volume. At the same time Best Buy, which reports on Tuesday, seems to have seen a strong start to the holiday season, but the question is whether November sales came at the expense of the retailer's margins. Early-bird discounts in late November drew hordes of people to retailers like Best Buy. Wall Street has priced in a profit of 61 cents per share, up from 53 cents per share one year ago.
Oracle, the world's No. 3 software maker, spells out its financial report on Thursday nearly a month ahead of other major tech companies -- a kind of sneak peek into the health of the tech industry. Watch for whether it can extends last quarter's surge in software sales, which generate long-term maintenance contracts and signal future profitability. They may also be eager to hear any comments about the Oracle and SAP's three-week courtroom drama that captivated Silicon Valley as a slew of high-profile executives testified. SAP was ordered to pay Oracle $1.3 billion for software theft in a jury verdict that could be the largest-ever for copyright infringement.
Blackberry-maker Research in Motion also reports on Thursday, but its fortune is less clear and it gets a chance to explain whether or not Apple has overtaken RIM. The focus will be on the high-end Torch phone and upcoming PlayBook tablet, which may serve as a strong complement in business markets to BlackBerry service. Since Apple kicked off the market with its popular iPad tablet earlier this year, rivals have been rushing to get tablets to market. The PlayBook is due is early 2011. 'There is interest (in PlayBook), but until there's more information available and they have the opportunity to try the product, it's a little early to tell,' RIM's markets President, Paget Alves said.
TAKE A LOOK-Weekahead from Reuters Editors
Five world markets themes next week
For all diaries
Keywords: WEEKAHEAD/AMERICAS (Editing by Stella Dawson, +1 646 223 6102) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.