The Week Ahead: Dec. 17-23, 2012

December 17, 2012 04:15 AM
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via a special arrangement with Informa Economics, Inc.

Hurricane Sandy relief aid | Fiscal cliff talks | Farm bill negotiations

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.

A hurricane relief bill, more negotiations on the fiscal cliff issues and likely some ongoing talks on a new farm bill highlight this week in Washington.

The Senate will consider a $60.4 billion supplemental spending bill (HR1) that would provide relief to areas affected by Hurricane Sandy. The bill, agreed to by Senate appropriators and requested by the Obama administration, would provide federal disaster funds to the states affected by Hurricane Sandy, which impacted the East Coast in late October. Senate Majority Leader Harry Reid (D-Nev.) said last week that he hopes to clear the bill as quickly as possible in order to allow the House time to consider it before leaving for the holidays.

The Senate also could consider the conference report (HR 4310) on the Dept. of Defense authorization bill, if a compromise is reached. Tg

The House plans to consider the conference report for the FY 2013 National Defense Authorization Act, as both chambers hope to iron out final sticking points and get the measure done by year’s end.

Fiscal cliff discussions will continue, with members awaiting a deal between the White House and congressional leaders to prevent tax hikes and spending cuts next year, called the fiscal cliff. House Majority Leader Eric Cantor (R-Va.) said during a floor colloquy Dec. 13 that due to the ongoing negotiations on the fiscal cliff, members should be aware that a weekend session is possible. In a later statement, he urged members to keep their travel schedules as “flexible as possible.” The House remains committed to remaining in session until an agreement can be reached, he added.

House Speaker John Boehner (R-Ohio) proposed allowing tax rates to rise for the wealthiest Americans if President Barack Obama agrees to major entitlement cuts. Boehner in recent talks with President Obama suggested hiking tax rates for top wage earners, including those with annual incomes of $1 million or more annually, beginning Jan. 1. Boehner also reportedly wants to use a new method of calculating benefits for entitlement programs known as “chained CPI,” which would slow the growth of Medicare and other federal health programs and save hundreds of billions over the next decade. The proposal, as a whole, still is not acceptable to President Obama and Democratic leaders in Congress. Obama has drawn the line at the top two tax brackets, which would allow rates to rise for individuals reporting income of $200,000 and families with income of at least $250,000, but the White House has signaled it is willing to let the rates rise short of the 39.6 percent due to take effect for the top earners. Raising rates on taxpayers who earn more than $1 million could raise $400 billion over a decade, the Congressional Research Service estimated in July. That is about half of what would be raised under Obama’s demand. Boehner previously offered $800 billion in revenue from the wealthy, but only by shrinking deductions and other tax breaks, not with rate increases. The new offer would push the revenue to around $1 trillion over a decade. Obama’s latest offer was $1.4 trillion, down from $1.6 trillion in his initial proposal. The latest offer by Boehner was first reported by Politico and later by The Associated Press and Reuters, citing anonymous sources.

Agriculture interests are zeroed in on the farm bill and how and whether it will be melded into any fiscal cliff package. But odds that a deal will be reached on the cliff issues remain uncertain, as the potential exists that we could see an agreement still not reached until after Christmas. Still, top officials are continuing to talk with new options under review by both political parties. Majority Leader Eric Cantor (R-Va.) said last week that the House is committed to address the issue of the farm bill “prior to leaving for the end of the year,” but has not said exactly when.

Both the House and the Senate also are expected to consider a resolution regarding the Dec. 14 mass shooting in Newtown, Conn., which left at least 27 people dead, including 20 children. President Obama on Sunday traveled to Newtown to meet with the families of those who were lost and to thank first responders. The president also spoke at an interfaith vigil for families of the victims as well as families from Sandy Hook Elementary School.

President Obama plans to leave with his family on Friday for their annual holiday trip to his native Hawaii. But he may repeat what occurred last year when he remained in Washington fighting for an extension of the payroll-tax cut,while the First Lady and daughters Sasha and Malia went off to Hawaii on their own, with the president following days later.

Congressional hearings this week will include topics on computerized trading venues, consumer credit reports, and pension plans.

President Obama this week could nominate a new Secretary of State to replace outgoing Secretary Hillary Clinton. Sen. John Kerry (D-Mass.) is widely expected to be tapped. Clinton is recovering at home after suffering a concussion, a spokesman said Saturday. “While suffering from a stomach virus, Secretary Clinton became dehydrated and fainted, sustaining a concussion,' Philippe Reines said in a statement. “She has been recovering at home and will continue to be monitored regularly by her doctors.” At the recommendation of her doctors, “she will continue to work from home next week, staying in regular contact with Department and other officials,” he said. Clinton canceled a trip to North Africa last week due to illness. Clinton will be unable to testify on the Benghazi raid next week in front of the House Foreign Affairs Committee and the Senate Foreign Relations Committee due to her recent concussion. Clinton deputies Tom Nides and Bill Burns will testify in her place before Senate and House committees.

Economic data and the fiscal cliff remain the factors for financial markets. While there are plenty of economic updates due out, as we’ve seen, the fiscal cliff situation remains a factor that can offset even positive economic figures. Monday opens with the Empire State index, with the Housing Market Index on Tuesday, with Housing Starts on Wednesday. Thursday brings the update on GDP along with weekly jobless claims, Existing Home Sales and the Philadelphia Fed manufacturing index while the week closes out with Durable Goods, Personal Income and Outlays and Consumer Sentiment data. Beyond the economic data and the fiscal cliff, markets will continue to watch for any new developments out of Europe or China on their economic front.

For agriculture, the USDA data release stream this week is not as heavy as the past week. But there are still some key reports to watch. USDA economists provide an update on the livestock, dairy and poultry sectors on Monday, with the weekly update on exports Thursday, with Friday bringing monthly reports on Livestock Slaughter, Cattle on Feed and Cold Storage. Demand news still remains a focus so tenders from various world buyers will be monitored.

Monday, Dec. 17
Federal Reserve: Fed Governor Jeremy Stein speaks about global banks at a forum in Germany. Richmond Fed President Jeffrey Lacker discusses the economic outlook.
Europe: ECB President Mario Draghi testifies about economic and monetary affairs at the European Parliament.
Economic reports:
Selected Interest Rates (Federal Reserve) | Empire State Mfg Survey | Treasury International Capital
USDA reports:
Export inspections (AMS) | Livestock, Dairy and Poultry Outlook (ERS) | National Hop Report (NASS) | Sugar and Sweeteners Outlook (ERS)

Tuesday, Dec. 18
US-China Joint Commission on Commerce and Trade (JCCT): The annual meeting will take place Dec. 18-19 in Washington. The US delegation will be headed up by US Trade Representative Ron Kirk and Acting Commerce Secretary Rebecca Blank , although USDA Secretary Tom Vilsack will also take part in the discussions. Vice Premier Wang Qishan will head up the Chinese delegation. Kirk said this year's meeting will focus on enforcement of intellectual property rights, technology transfer, eliminating industrial policies that distort trade, and removing other obstacles to US exports. Vilsack said the US intends "to address a range of market access issues affecting exports of US meat and poultry products, as well as horticultural products.
Federal Reserve: Dallas Fed President Richard Fisher, a hawk, speaks on the economy.
Computerized trading: Subcommittee hearing. Senate Banking, Housing, and Urban Affairs subcommittee hearing on computerized trading venues. The Subcommittee on Insurance and Investment will focus on what the regulations should be for these venues. The panel will hear testimony from Lawrence Leibowitz, chief operating officer of NYSE Euronext, and Dan Mathisson, head of US equity trading for Credit Suisse Securities LLC, among others.
Nominations: Senate Commerce, Science, and Transportation Committee could vote on nominees who appeared before for Dec. 4 hearing. Those include Mark Doms, to be undersecretary of commerce for economic affairs; Polly Ellen Trottenberg, to be undersecretary of transportation for policy; Mignon L. Clyburn, to be a commissioner of the Federal Communications Commission; and Joshua D. Wright, to be a commissioner of the Federal Trade Commission.
Energy: Weekly National Petroleum Report (American Petroleum Institute).
Economic reports: ICSC-Goldman Store Sales | Housing Market Index.
USDA reports: Fruit and Tree Nuts Outlook (ERS)

Wednesday, Dec. 19
South Korea holds a presidential vote.
Financial regulation: Subcommittee hearing. Senate Banking, Housing, and Urban Affairs Subcommittee on Financial Institutions and Consumer Protection will examine consumer credit reports. Scheduled witnesses include Corey Stone, assistant director for the Office of Deposits, Cash, Collections, and Reporting Markets in the Consumer Financial Protection Bureau, Stuart Pratt, president and chief executive officer of the Consumer Data Industry Association, and Chi Chi Wu, attorney for the National Consumer Law Center.
Energy reports: Weekly Petroleum Status Report (EIA) | Weekly ethanol plant production (EIA).
Economic reports: Weekly mortgage applications (Labor Dept.) | MBA Purchase Applications | Housing Starts.
USDA reports: Broiler Hatchery (NASS) | Milk Production (NASS)

Thursday, Dec. 20
Hurricane Sandy: Subcommittee hearing. Recovery from damage inflicted by Hurricane Sandy is the topic of a hearing planned by Senate Banking, Housing, and Urban Affairs Subcommittee on Housing, Transportation, and Community Development. The hearing will focus on rebuilding housing and transportation infrastructure in the aftermath of the destructive storm.
Transportation: Weekly Traffic of Major Railroads (Assn. Of American Railroads) | Grain Transportation Report (AMS).
Energy reports: Weekly US underground natural gas stocks (EIA).
Economic reports: Jobless Claims (Labor Dept.) | GDP | Existing Home Sales | Weekly Mortgage Rates (Freddie Mac) | ICI weekly money market mutual fund data | Phila. Fed Survey | Leading Indicators.
USDA reports: Export Sales (FAS) | Catfish Feed Deliveries (NASS) | Catfish Processing (NASS) | Wheat Data (ERS) | Feed Grains Database ERS

Friday, Dec. 21
Nasdaq replaces a number of stocks in its Nasdaq 100 index.
Economic reports:
Durable Goods Orders | Personal Income and Outlays | Consumer Sentiment
USDA reports: Livestock Slaughter (NASS) | Cold Storage (NASS) | Cattle on Feed (NASS) | Chickens and Eggs (NASS) | Peanut Prices (NASS) | Monthly Milk Cost of Production (ERS)

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.






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