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President Barack Obama greets surprised tourists at the Lincoln Memorial in Washington, DC, Saturday, April 9, 2011. The President made an unannounced stop to thank people for visiting the memorial a day after he and Congressional leaders agreed on a bill to keep the government open.
US Budget: President Obama on Wednesday will propose major spending
cuts and tax changes to slash the federal deficit. He will target both
entitlements such as healthcare programs for the elderly and poor, Medicare and
Medicaid, as well as changes in the pensions system, Social Security. There will
also be proposals for tax increases on people earning more than $250,000
"Every corner of the federal government has to be looked at here," David
Plouffe, a senior White House adviser, said Sunday during a series of television
appearances. "Revenues are going to have to be part of this," he said,
referring to tax increases.
Although Obama’s health-care law is projected to limit Medicare spending over
time, “we have to do more,” Plouffe said Sunday, marking the first time
the administration has made an explicit commitment to changes in entitlement
programs for the purpose of deficit reduction.
Contrasting the president’s approach with what Republican leaders have proposed,
Plouffe said Obama will use a “scalpel” and not a “machete” as he
seeks to preserve funding for education and other areas such as research, that
he considers crucial to the country’s long-term economic success.
Last week the Republicans proposed cuts of $6.2trn over 10 years while Obama's
2012 budget to take effect on Oct 1st, provided for $1trn in reductions over the
Last Friday, with just over an hour before the midnight deadline, Republicans
and Democrats agreed on $38bn in federal budget cuts to this year's budget to
avert a government shutdown.
Congress will soon have to vote to raise the legal limit on the federal debt,
now $14.25trn. The government is expected to hit that borrowing ceiling in about
five weeks, the Treasury Department has said.
Economic View: Ireland still standing firm on corporation tax issue;
Goodbody chief economist, Dermot O’Leary, commented: --
"Unsurprisingly, Portugal’s request for international aid dominated proceedings
at the EU Finance Ministers meeting in Budapest at the end of last week.
From an Irish perspective, its aim to achieve a reduction in the interest
rate on its loan package still appears to be an elusive one. Heavy pressure is
still being exerted on Ireland to give some concessions in the area of
corporation tax in return for a reduced interest rate. German Finance Minister
Wolfgang Schauble was clear in his position when he said 'If Ireland on its side
doesn’t want to have any changes, then there is no willingness on the side of
the governments to make changes.'
The ball is clearly in Ireland’s court on this particular issue. It is
clear that any changes to the 12.5% corporation tax rate are off the table from
an Irish perspective. Apart from the political damage it would do to the new
Government, it would also be the wrong decision from an economic point of view
for the country. Knowing that Ireland does hold a difficult negotiating
position, it may have to give some concessions by way of agreeing to examine the
issue of the corporation tax base. For now though, Ireland is correct to hold
its position, as maintaining a key plank of its successful industrial policy is
more important than a cut in the interest rate."
"Statistics do not reveal the shock or the aftermath of the earthquake yet," Seijiro Takeshita, director at Mizuho International told CNBC. He added that it was too early to assess the impact of the earthquake on Japan's automobile and electronic sectors:
Rising oil prices fail to dent market optimism
— for now: Davy's
Barry Dixon comments -- "Brent crude futures have increased
by almost one-third year-to-date, with the price increasing from $95
at the end of December to $126 at the end of last week. Taken
together with rising prices in other commodities, the devastating
earthquake in Japan, unrest in the Middle East and now rising
interest rates in Europe, one would have expected the market to
reflect these negative trends.
The reality however is quite different. The S&P index is 6%
higher year-to-date, the FTSE-100 is up almost 3% while the E300
Index is up 2.4%. Global equity markets appear to want to advance,
regardless of the macroeconomic or geopolitical issues.
This week will see the start of the Q1 earnings season in the
US. Poor weather in Q1 2010 is likely to provide a favourable
platform for easy comparisons in the quarter just ended. This could
continue to drive the market, at least in the short term. However,
any sign that rising input costs are having a detrimental impact on
margins as companies struggle to push through price increases could
raise concerns. The market cannot continue to ignore these trends
"Consensus reports are almost always wrong," Richard Cookson, chief investment officer, Citigroup Private Banking told CNBC.
MSCI Asia Pacific Index fell 0.8% Monday. The index was down
1.4% this year to last Friday compared
with a gain of 5.6% by the S&P 500.
Japan's Nikkei 225 dipped 0.52%; China's Shanghai composite index added 0.44%;
Australia's S&P/ASX 200 Index gained 0.62% and the Bombay Stock Exchange's Sensex index dipped 0.66% in Mumbai.
BDI closed at 3,005 on Thursday, Dec 31st - - a rise of 289% in 2009. The index
averaged 59% lower in 2009 than a year earlier.
Thursday, July 15, 2010, the index fell for the 35th straight session, by 9
points, or 0.537%, to 1,700 points,
On Friday July16th, the BDI rose 20
points or 1.12% to 1,700 to break the 35-session losing streak.
Friday last week, the BDI slipped 25 points or 1.78% at 1,376.
The Financial Times reported
earlier in January, that Australia’s flooding and fears of ship oversupply has
pushed down a gauge of the cost of hiring ships to carry coal, iron ore and
other dry bulk by nearly half since October to the lowest level since the
aftermath of the financial crisis. The Baltic Dry index, the widely watched
measure of dry bulk charter rates, fell to 1,453, nearly half the 2,784 peak
reached on October 27, 2010.
margin between the US benchmark WTI (West Texas Intermediate) used on the New
York Mercantile Exchange and Brent is almost $11.
said in early February that a surge in oil inventories in Cushing, Oklahoma,
where WTI is delivered into America’s pipeline system, has depressed the value
of the benchmark against other yardsticks. The
International Energy Agency said on Thursday that with “few relief valves” to
cut the stock overhang in Cushing, the price dislocation “may persist for months
[or years] to come”.
spot price of an oz of gold is trading in New York at $1,472.70, down $2.30 from
Financials: UK banking body recommends 10% core tier 1 ratio; Goodbody's
Eamonn Hughes comments - -"The UK’s Independent Commission on Banking
has announced today in the UK that it will force lenders to ring-fence their
consumer banking units, after stopping short of recommending a full break up.
importantly for read through with the Irish banks, the ICB also recommended a
core tier 1 target level of 10% for the banks. This appears to be an equity
baseline figure, which means that it is more stringent than the 10.5% figure set
for the Irish banks set in the recent PCAR ((Prudential Capital Assessment
Review - - stress tests). Bear in mind the Irish target is not all equity, with
BOI for instance having 3.3% points of its core Tier 1 in the shape of the
government’s preference shares.
said that, the PCAR tests require a regulatory buffer above the 10.5% minimum in
the form of equity and contingent debt capital (nearly 1% equity in the case of
BOI and a further c.2% of Co-Cos). Also, the balance sheets were further
stressed to hold a 6% CT1 figure against the EBA tests for European banks at
"The consensus almost always assumes things will work out in the best of all possible worlds and that's usually the right call, but what we tend to do is highlight the risks in that view," Danny Gabay, director of Fathom Consulting told CNBC. He added that their outlook on the world economy cited the euro area as the top risk to global recovery: