WEEKAHEAD – View from editors in the Americas

NEW YORK, Dec. 11 (BestGrowthStock) – Following is the view from
editors in the Americas on the top stories for the week ahead:


* 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



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 [ID:nN06200548]


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.


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 [ID:nN08167483]
U.S. economic data (ECI/US: )


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

Wall Street Weekahead (.N/O: )

Treasuries Weekahead (US/O: )

Global Markets weekahead [ID:nLDE6B90EP]


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 [ID:nSGE64G01N]
Five world markets themes next week [MKT/THEMES]
For all diaries [DIA]

WEEKAHEAD – View from editors in the Americas