Turkey and Azerbaijan will sign a memorandum of understanding tomorrow, establishing a consortium that will build a pipeline to ship natural gas from the BP Plc- operated Shah Deniz field to Europe via Anatolia.
State Oil Co. of Azerbaijan, or Socar, Turkey
+%3Cp%3E+It+looks+like+the+millionaire+surtax+is+going+down+again.%3C%2Fp%3E%3Cp%3EDemocrats+have+pushed+for+weeks+to+impose+a+millionaire+surtax+to+help+pay+for+the+cost+of+extending+the+payroll+tax+cut.+Republicans+have+said+it+would+be+a+job-killer.%3C%2Fp%3E%3Cp%3E%3Cp%3E%3C%2Fp%3E%3Cp%3E%3Cp%3E%3C%2Fp%3E%3C%2Fp%3E%3C%2Fp%3E%3Cp%3EOn+Wednesday+night%2C+with+time+running+out+before+Congress+adjourns+for+the+year%2C+it+appeared+that+Democrats+were+ready+to+give+up+in+the+name+of+getting+a+deal+done.+A+source+told+CNN+that+Senate+Democrats+would+propose+a+new+plan+that+did+not+include+the+tax.+%28Read%3A+The+latest+on+negotiations%29%3C%2Fp%3E%3Cp%3EThe+demise+of+this+version+of+the+millionaire+tax+would+not+be+a+surprise.+Lawmakers+have+already+voted+down+a+surtax+of+5.6%25%2C+then+3.25%25+and+most+recently+1.9%25.%3C%2Fp%3E%3Cp%3EBut+the+idea+of+taxing+the+rich+will+come+up+again+and+again+next+year%2C+since+themes+of+income+inequality+and+tax+fairness+will+be+sounded+repeatedly+on+the+campaign+trail.%3C%2Fp%3EPayroll+tax+cut%3A+What%27s+at+stake%3Cp%3EUrban+Institute+resident+fellow+Howard+Gleckman+points+out+that+an+extra+tax+on+millionaires+may+make+for+great+politics+but+it+would+make+for+awful+policy%2C+although+not+for+the+reasons+that+many+in+the+GOP+suggest.%3C%2Fp%3E%3Cp%3ERepublicans+still+cleave+to+the+notion+that+to+ever+ask+millionaires+to+pay+more+in+taxes+will+bring+the+economy+to+a+screeching+halt+because+it+would+hurt+small+business+job+creation.+%3C%2Fp%3E%3Cp%3EBut+there+are+problems+with+that+reasoning%3A%3C%2Fp%3E%3Cp%3E–A+very+small+percentage+of+tax+filers+with+business+income+make+more+than+%241+million.+%3C%2Fp%3E%3Cp%3E–There+is+no+way+to+tell+how+many+new+jobs+those+millionaires+create.+%3C%2Fp%3E%3Cp%3E–And+business+income+can+come+from+activities+that+don%27t+result+in+a+lot+of+hiring%2C+such+as+owning+rental+property+or+investing+in+a+partnership.+%3C%2Fp%3E%3Cp%3EFor+Gleckman%2C+a+big+problem+with+the+millionaire+surtax+is+that+it+feeds+the+myth+that+the+super+rich+can+pay+for+everything.+They+can%27t.+There+are+not+enough+of+them.%3C%2Fp%3EPayroll+tax+cut+divide%3A+How+to+pay+for+it%3Cp%3EAnd+by+applying+a+surtax+here+and+a+surtax+there%2C+soon+you%27re+talking+serious+rate+creep+–+to+levels+that+could+be+counterproductive+%3Ca+href%3D%22http%3A%2F%2Fus-fast-cash-now.com%22%3Efast+cash%3C%2Fa%3E%3C%21–+.+–%3E.+The+higher+rates+become+the+more+likely+it+is+that+the+rich+will+look+for+ways+to+avoid+paying+them.%3C%2Fp%3E%3Cp%3EIf+the+Bush+tax+cuts+expire%2C+the+top+rate+goes+to+39.6%25+and+the+value+of+certain+deductions+goes+down.+Add+in+a+new+Medicare+tax+for+high-income+households+starting+in+2013%2C+and+the+top+rate+could+approach+50%25+if+Congress+passed+a+5.6%25+surtax%2C+Gleckman+noted.+%3C%2Fp%3E%3Cp%3EDespite+the+flaws+in+the+parties%27+strategies+–+Democrats+always+reach+first+to+tax+the+rich+and+Republicans+always+rush+to+protect+them+even+at+the+expense+of+everyone+else+–+each+contains+a+bit+of+truth+the+other+side+will+have+to+accept+sooner+or+later.%3C%2Fp%3E%3Cp%3E%3C%2Fp%3E%3Cp%3E+%3C%2Fp%3E%3Cp%3EBoth+the+rich+and+the+middle+class+eventually+will+have+to+contribute+to+efforts+to+spur+the+economy+and+stabilize+the+federal+budget.%3C%2Fp%3E%3Cp%3E%26quot%3BDemocrats+today+can%27t+solve+our+nation%27s+many+budgetary+woes+primarily+by+taxing+the+rich%2C+and+Republicans+risk+alienating+the+middle+class+when+they+try+to+spare+the+rich+from+sharing+the+additional+burdens+most+Americans+soon+must+bear%2C%26quot%3B+former+Treasury+official+Eugene+Steuerle+wrote+in+his+public+policy+column+%26quot%3BThe+Government+We+Deserve.%26quot%3B%3C%2Fp%3E%3Cp%3EThe+rich+will+have+to+pay+more+in+taxes%2C+he+notes%2C+because+even+if+spending+is+cut+across+the+board%2C+they+won%27t+feel+the+pinch+since+they+don%27t+rely+on+government+spending+to+get+by.%3C%2Fp%3E%3Cp%3EAnd+the+middle+class+will+eventually+need+to+accept+some+spending+cuts+and+tax+increases%2C+Steuerle+said%2C+%26quot%3Bnot+because+the+rich+can%27t+pay+more%2C+but+because+most+income+in+the+economy+resides+with+that+80+percent+of+the+population+that+is+neither+poor+nor+rich.%26quot%3B%26nbsp%3B+%3C%2Fp%3E++%3Cp%3E%3Ca+href%3D%27http%3A%2F%2Fmoney.cnn.com%2F2011%2F12%2F14%2Fnews%2Feconomy%2Fmillionaire_surtax%2Findex.htm%27+rel%3D%27nofollow%27%3ESource%3C%2Fa%3E%3C%2Fp%3E+
U.S. online sales this holiday shopping season are up 15 percent compared to last year, after what may have been the busiest week of the season, said research firm comScore on Sunday.
Shoppers have spent $30.9 billion online from Nov. 1 through Dec. 16, up from $26.9 billion at the same point last year, said the Reston, Va., company, which tracks Web use.
Online sales surpassed $1 billion on four days last week. Total sales for the week climbed 15 percent to $6.31 billion compared to last year.
The five days that ended on Friday “will almost certainly be the heaviest week of the online holiday shopping season,” said comScore chairman Gian Fulgoni. Online spending will begin to slow as Christmas draws closer, he said.
But “Cyber Monday,” the Monday after Thanksgiving, is still the largest online shopping day ever, according to comScore. Sales for that day rose 22 percent from last year to $1.25 billion. Cyber Monday sales topped $1 billion for the first time last year.
The holiday shopping season can make up to 40 percent of retailers’ annual revenue. The online sales data point to Americans’ growing comfort with using their personal computers, tablets and smartphones to shop for the holidays.
Discounting and promotions have also boosted shopping this year. ComScore said on Sunday that shoppers have received free shipping on at least half of all their purchases in each week of this year’s holiday shopping season.
European Central Bank president Mario Draghi says there’s “no external savior” for heavily indebted governments in the eurozone debt crisis and gave no sign the bank is ready to step in and support their finances.
Draghi said governments must take the tough steps to balance budgets and reform economies to promote growth.
“I will never tire of saying that the first response should be from government,” Draghi said Thursday at a speech in Berlin. “There is no external savior for a country that doesn’t want to save itself.”
As a “firewall” to calm markets in the meantime, Draghi said, the EU has its newly strengthened bailout fund.
Some economists have urged the ECB to support governments with bigger purchases of government bonds. So far the bank has made some purchases but kept them limited and said the program is temporary, stressing that governments must not rely on such help from the ECB.
Draghi said that the purchases were “neither eternal nor infinite.”
In his speech, Draghi focussed instead on the European Financial Stability Facility, the current EU bailout fund, as the “firewall” against the crisis. He urged EU officials to quickly implement decisions to strengthen it to assure markets governments will pay their debts on time.
Governments have agreed on ways to increase the fund’s lending power and are seeking outside investors such as countries in emerging markets to contribute to its lending power, so far without much progress.
Economists say the EFSF is too small to bail out Italy, the most recent focus of the debt crisis that has seen Greece, Ireland and Portugal seek bailouts from other eurozone governments and the International Monetary Fund.
Stock markets steadied Tuesday after the previous day’s big declines when investors fretted over the deal to fix the euro crisis by binding member economies closer together.
Optimism over last Friday’s agreement by the 17 euro countries and nine others to adopt a new fiscal pact to prevent a repeat of the debt crisis evaporated Monday after credit rating agencies Moody’s and Fitch both said it was insufficient and would not materially address the crushing debt loads of some nations or their rising borrowing costs.
Moody’s warned that it will review all EU governments’ ratings for possible downgrades in early 2012 _ a threat that analysts said was particularly worrisome to France, a major contributor to the European Financial Stability Facility, Europe’s emergency bailout fund. A downgrade of France’s triple A rating could hurt its ability to fulfill its commitments to the fund.
Investors are also awaiting the response of rival agency Standard & Poor’s. Last week it warned that it could downgrade most of the eurozone economies, including Germany, if the deal failed to deliver.
“It was not the reaction to the summit that politicians had hoped for, but it was in line with previous market response to summits which are sold as being the solution to all of Europe’s problems but end up raising more questions than they answer,” said Gary Jenkins, an analyst at Evolution Securities.
Following Monday’s big retreat, there’s been a calmer tone in the markets, though skepticism over the deal’s details remain.
In Europe, Germany’s DAX recouped some of Monday’s lost ground, trading 0.5 percent higher at 5,815 while the CAC-40 rose 0.1 percent to 3,092. The FTSE 100 index of leading British shares rose 0.4 percent to 5,450.
Wall Street was poised for modest gains at the open _ Dow futures were up 0.4 percent at 11,991 while the broader Standard & Poor’s 500 futures rose an equivalent rate to 1,235.
The calmer tone was evident in the performance of the euro, which was trading 0.2 percent higher at $1.3195. On Monday, the single currency fell to a 10-week low over worries that Europe’s new financial pact won’t be enough to stop the region’s growing debt crisis.
“The financial markets are now digesting the details of the EU deal struck last Friday, and it is quickly becoming apparent that the financial markets have once again given it the thumbs down, which could quickly result in increased concerns of major funding difficulties emerging in the first half of 2012 when there is sizable sovereign debt to be rolled over, in particular in Italy,” said Derek Halpenny, an analyst at The Bank of Tokyo-Mitsubishi UFJ.
Another currency in the headlines was the Indian rupee, which hit a fresh record low Tuesday, after a contraction in industrial output reported the day before. The currency touched 53.52 against the dollar, down over 21 percent since late July. It is the third time in three weeks that it has breached prior lows.
The plunging currency is further darkening the economic outlook for Asia’s third largest economy. While a weak rupee can help exporters, it wreaks havoc with India’s giant oil import bill, deepening the country’s growing deficit.
“It clearly reflects the slowing economy in India and also the flight to the dollar of global money,” said SMC Global Securities strategist Jagannadham Thunuguntla.
The benchmark Sensex index was up 0.6 percent in midday trade in Mumbai, as trading held steady after a punishing three-day slide.
Elsewhere in Asia, stocks took a battering following the previous day’s retreats in Europe and the U.S.
Japan’s Nikkei 225 fell 1.2 percent to close at 8,552.81 while South Korea’s Kospi gave up 1.9 percent to 1,864.06 and Hong Kong’s Hang Seng lost 0.7 percent to 18,447.17. On mainland China, the benchmark Shanghai Composite Index fell 1.9 percent to 2,248.59, its lowest in closing since March 2009. The Shenzhen Composite Index lost 3 percent to 921.32.
Oil prices tracked equities in Europe modestly higher ahead of a meeting of the OPEC oil cartel in Vienna, Austria, which is expected to see production levels left unchanged _ benchmark oil for January delivery was up 38 cents to $98.14 per barrel in electronic trading on the New York Mercantile Exchange.
Ski resort operator Peak Resorts filed documents with federal authorities this month that more than doubles its plans for an initial public offering of its common stock to $103.5 million.
Wildwood-based Peak Resorts, which owns the Hidden Valley ski area locally and owns or leases 11 other ski properties nationwide, originally filed for a $40.3 million IPO in mid-April, but shelved its plans to go public for several months.
According to documents Peak Resorts filed with the Securities and Exchange Commission on Nov. 21, the company has significantly expanded its IPO plans and now will offer 5 million shares of its stock on NASDAQ under the symbol PEAK, priced between $16 and $18 per share.
The prospectus also reveals other details about the company’s operations and its growth in recent years. Peak Resorts, led by CEO Tim Boyd, has grown its revenue 305 percent from fiscal 2006 to fiscal 2011, when it had $98 million in revenue, according to its prospectus. In fiscal 2010, the company had $90 million in revenue.
Peak Resorts, which says it owns more ski areas in the U.S. than any other company, plans to use the $79 million in proceeds from the offering to repay debt on several of its properties, including $9 million to purchase the land beneath two ski areas in northeastern Pennsylvania, Jack Frost and Big Boulder, that it currently leases. The properties are both under contract with closing dates expected before the end of the year.
Peak Resorts also plans to use $6.5 million of the IPO proceeds to construct a new high-speed chair lift at its Mount Snow ski area in southern Vermont.
The economic downturn did not stop customers from hitting the slopes, Peak Resorts stated in its prospectus, and the number of visitors to its 12 ski resorts increased during the past two winter ski seasons.
Locally, Peak Resorts’ 250-acre Hidden Valley ski area and tube park opens from mid- December through February. Boyd developed Hidden Valley in 1982 and incorporated Peak Resorts as a holding company in 1997. In Peak Resort’s fiscal year, which ended April 30, 2011, Hidden Valley had $3.6 million in revenue, accounting for 4 percent of Peak’s total revenue.
Trading has been temporarily suspended on the Egyptian stock exchange after its benchmark index spiked by 5 percent.
The surge reflects optimism stemming from the relative calm and a massive turnout that marked the country’s first parliamentary elections after Hosni Mubarak’s ouster.
The Egyptian Exchange’s benchmark EGX30 index was up 5.08 percent within minutes of the start of trade on Tuesday. The broader EGX100 index surged 5.01 percent, prompting a halt temporary halt in trading guaranteed cash advance.
Brokers attributed the rally to optimism over the landmark elections that began on Monday. The vote, which continues on Tuesday, is widely seen as a pivot point in the country’s push toward democracy after roughly 30 years of Mubarak’s rule.
Will Santa drop any loot into your 401(k) or IRA this year?
Typically, investors can count on a “Santa Claus rally” in the stock market between Thanksgiving and New Year’s, as an upbeat mood about the coming year prompts investors to indulge in stocks along with all the holiday fare.
But this year, questions abound about whether a fragile economy could fall back into recession. The European debt crisis looks increasingly out of control, while the latest chapter in Capitol Hill dysfunction raises the chance of higher taxes for all taxpayers and a smaller safety net for the unemployed.
“Supercommittee failure means that there is a greater risk that the payroll tax cut expires, though there is still a chance this could be attached to a year-end spending bill,” said Goldman Sachs economist Alec Phillips.
Payroll tax relief, which was enacted to put more spending money into consumers’ pockets, will expire at the end of the year if Congress takes no action, and so far, Congress has shown no inclination to work cooperatively on tax or deficit-cutting measures. If the payroll tax cut disappears, the government will collect about $110 billion more a year, but that money will no longer be in paychecks as potential spending money.
That’s a concern to investors, because the economy needs consumer spending to grow. In addition, extended unemployment benefits, which provide people with about $50 billion a year to spend, would not be available either.
JPMorgan Chase economists have estimated that if the stimulus expires, the economy will go from a 3 percent annual growth rate this quarter to a 1.5 percent growth rate in the second quarter of next year as households encounter a ’sharp hit” to their after-tax income. The economists expect “consumer spending to stagnate.”
The stock market has slid the last couple of days as investors have envisioned ongoing paralysis, a recessionary threat and the potential of a negative credit rating for U.S. debt. Investors were shaken in August, when Standard & Poor’s responded to government inaction on the nation’s debt by knocking the U.S. credit rating down a half a notch, but the agencies have suggested recently that no further downgrades are planned.
That should be a relief to investors, because downgrades can inflict higher borrowing costs on countries, making it difficult to operate. But instead of U.S. Treasury yields rising, as they would based on fear of a downgrade, the 10-year bond dipped below 2 percent this week based on a different concern: Moody’s economist John Lonski said investors were worried that automatic cuts in government spending and further federal deficit trimming would slow the economy. Investors move money to safety in bonds, and consequently, yields fall.
Besides the $110 billion payroll tax cuts and $50 billion in unemployment help that could disappear, there are trillions in additional measures that will arise over the next year that could interfere with consumer spending and be a drag on the economy. If the “Bush tax cuts,” enacted in 2001 and 2003, expire according to schedule at the end of 2012, consumers will have about $4 trillion less to spend over the next 10 years.
For middle-income people, the tax cuts that could expire include a $1,000 child tax credit for parents. But it will decline to $500 without congressional action. Low-income taxpayers also now have a 10 percent tax bracket, but that will escalate to 15 percent if the deadline for an extension runs out. For middle-income and affluent people, the current tax structure will allow about 33 million people to escape the higher alternative minimum tax, if Congress keeps it going. For the rich, the expiration of an estate tax break will mean paying taxes on assets over $1 million, compared with protecting $5 million now.
Meanwhile, as investors worry that a wrong move on taxes and spending could hurt consumers and undermine the economy, trouble in European banks is starting to affect distant areas. Fearful banks are holding on to capital instead of lending, and strategist Ed Yardeni notes that’s interfering with lending in emerging markets.
Ratings agency Standard & Poor’s on Thursday pushed Egypt’s sovereign credit ratings deeper into junk status, citing the country’s dire political and economic situation and the increased risk of civil strife.
The cut is the latest blow to Egypt, whose economy is reeling from nine months of protests and strikes since the mid-February ouster of former President Hosni Mubarak. Last month, Moody’s Investors Service also cut its ratings for Egypt, citing the ongoing political challenges and the weak economy.
S&P said it cut Egypt’s long-term foreign and local currency sovereign ratings to B+ from BB-, with a negative outlook.
“The downgrade reflects our opinion that Egypt’s weak political and economic profile … has deteriorated further,” the agency said in a statement.
In addition to the current wave of protests against the ruling military council, it cited the erosion of the country’s net international reserves and the risk of further unrest stemming from rising expectations.
“These challenges could arise if populist demands for greater political participation are thwarted, or from demands for improved living standards from different sectors of the population no matter who is governing Egypt,” the agency said.
The timing of the ratings cut is also troubling for Egypt, coming days before the Nov. 28 parliamentary elections _ the first since Mubarak left office. The fate of the elections is uncertain following the latest protests, in which demonstrators have called for the country’s military rulers to step down and transfer power to a national salvation government payday advance online.
Months of unrest have led analysts to cut forecasts for Egypt’s economic growth. A nation that just a few years earlier had boasted growth rates of 7 percent is expected to realize anemic growth of around 1 percent this year, according to the International Monetary Fund.
Equally troubling has been the drop in international reserves, which fell from $36 billion at the end of December to $22 billion by the end of October. That decline, in part, has been linked to the Central Bank’s efforts to prop up the Egyptian pound.
The stock market’s benchmark index has shed almost 48 percent since the start of the year, losing around 190 billion pounds ($32 billion) and earning the dubious distinction of being among the worst performing in the world after Greece and Cyprus. On Thursday, the EGX30 index was up about 1.6 percent.
Bond and Treasury bill yields have climbed sharply, reflecting the premium the government must pay to borrow money, and the deficit is expected to climb above earlier forecasts of around 8.6 percent as officials are forced to increase spending to meet incessant popular demands for a boost in the standard of living.
“Following Egypt’s popular uprising of January 2011, public expectations regarding the government’s ability to promptly deliver improved living standards remain high,” S&P said.