December 4, 2012
Fiscal Cliff Countdown: 27 days
Stocks fell as manufacturing numbers dropped and Washington continued its fiscal cliff talks. Indices started out the day strong but trended down all session to close near the lows. The S&P 500 was down -0.47% while the 10yr Treasury advanced +0.6bps to 1.6216%. The Nov. ISM manufacturing index was 49.5 versus the estimate of 51.4.
Stocks are little changed in the U.S. while the dollar weakened for a fifth day and commodities fell as U.S. leaders prepare for more budget talks. In Europe, stocks pared losses as finance ministers meet in Brussels to focus on setting up a common bank supervisor.
Today’s Economic Data Lineup (EST)
9:45am: ISM New York, Nov. (prior 45.9)
10:45am: Fed’s Tarullo speaks at Brookings Institution in Washington
11:30am: U.S. Treasury to sell 4W bills
- Bill Gross says structural headwinds may reduce real economic growth below 2% in the U.S. and other developed nations. “The biblical metaphor of seven years of fat leading to seven years of lean may be quite apropos in the current case with the observation that the developed world’s growth binge has been decades in the making,” Gross wrote in his monthly investment outlook posted on the Newport Beach, California-based company’s website today. “We may need at least a decade for the healing.”
- U.S. House Speaker John Boehner proposed $2.2 trillion of spending cuts and new revenue that lacks higher-tax rates on top-earning Americans, a piece President Obama calls essential for a fiscal agreement. The Obama administration rejected the plan. The two sides remain far apart with just four weeks left before more than $600B in tax increases and federal spending cuts start taking effect.
- Euro-area finance ministers voiced confidence that Greece will be successful in its €13B bond repurchases it began yesterday. “I’m confident it will go well,” French Finance Minister Pierre Mosovici told reporters after finance chiefs met in Brussels. “It seems to be happening under satisfactory conditions.” European governments are counting on the buyback as a market-based way of cutting Greece’s debt, paving the way for continued aid payouts.
- The RBA cut its benchmark interest rates by a quarter of a percentage point to 3%, matching the half-century low set during the 2009 global recession as the labor market falters and an elevated currency hurt industries like manufacturing and tourism. The sixth cut in the past 14 months was predicted by 20 of 28 economists surveyed by Bloomberg.
- Australian home-building approvals declined more than forecast in Oct., led by a slump in apartment projects. The number of permits granted to build or renovate houses and apartments dropped -7.6% from Sept., when they rose a revised +9.5%.
“You cannot dream yourself into a character; you must hammer and forge yourself one.”
-Henry David Thoreau