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from the Wall St Journal

Just like China, India’s growth – 9% in the last 3 months ! – is creating it’s own problems, wealthier areas of the populus, changing tastes (literally), inflation and higher food prices

This article from the Financial Times

The forecast is 0.5% after Q2 1.2%

This may give the currency a bit further impetus if the result is worse than expectation

–Household Confidence, Long-Term Unemployment Also Key Issues

By Yali N’Diaye

COLUMBUS, Ohio (MNI) – The economy is not growing fast enough to
materially reduce the unemployment rate, Federal Reserve Chairman Ben
Bernanke repeated Tuesday, while also expressing his concern about the
high level of long-term unemployment and the loss of confidence among
households.

During a “Conversation on the Economy” with business leaders at the
Ohio State University Fisher College of Business, Bernanke otherwise
made no reference to monetary policy. Nor did Cleveland Federal Reserve
President Sandra Pianalto, who moderated the panel.

While the economy has been in an expansion phase since the middle
of 2009, “we need about 2% to 2.5% real growth just to accommodate new
workers coming into labor force,” Bernanke said.

“So at the pace of growth that we are seeing, we are not growing
fast enough to materially reduce the unemployment rate,” he added.

In October, the economy created a net 151,000 jobs, better than the
41,000 decline in September, but not enough to bring down the
unemployment rate, which has been at 9.6% since August.

This has implications for household finances, for instance, making
it difficult to meet mortgage payments, “which contributes to the
ongoing foreclosure crisis.”

Despite the recent job creation, “We are still very, very short,”
Bernanke said.

The loss of confidence in household is a barrier to recovery, he
said.

Earlier Tuesday, the Conference Board reported a 4.2-point increase
in the November Consumer Confidence Index. Yet, the percentage finding
jobs “hard to get” rose despite a rise in the percentage of those
finding jobs “plentiful.”

“After two years of personal losses, it’s going to take a lot to
convince consumers that the recovery is for real,” survey chief Lynn
Franco told MNI.

Specifically, she said consumers need a significant run of robust
payroll gains. “Gains of 100, 150, 175 (thousand) won’t be enough.”

Bernanke also expressed concern about the elevated share of people
who have been unemployed for more than six months, which is “very
unusual and it’s very worrisome.”

As a result, “Getting new jobs, getting unemployment down is of
incredible importance.”

This is as far as the Fed chairman went in his economic comments.

In fact, he then limited his remarks to asking questions of other
panelists, which included Ford Motor CEO Alan Mulally and IBM CEO Samuel
Palmisano.

One element the CEOs agreed on was the need for clarity from
Washington and the need for focus on improving the business environment.

This implies making clear decisions about taxes and trade policy in
particular to establish a level playing field at the global level, they
said.

Answering Bernanke’s question on the one thing Washington should
do, Palmisano, who was the most active speaker on the panel, urged
Washington to make up its mind. Just “pick it,” he said, referring to
the tax decisions in particular.

He added the issue is not a lack of liquidity, since “There is more
than we could probably consume.”

Small business leaders on the panel, however, disagreed on that
front, noting that their lines of credit have been reduced, forcing them
to find alternative ways of financing.

** Market News International **

[TOPICS: M$U$$$,MMUFE$,MGU$$$,MFU$$$]

• it supports the Deficit Commission’s decision to delay vote on recommendations in order to build concensus
• Obama won’t pre-judge the outcome of the Deficit Commission’s work, looks forward to hearing recommendations this week

Well December is upon us and the heavy snows in Europe and the heavy weight of the Euro both look bleak and troubling.

A pinch ‘n a punch to all ! The Euro is opening very soft near the overnight low at 1.2969 with, as Jamie alluded, barriers just below.

The wise men have spoken which leaves the shepherds and other hangers-on to have their turn…seems they are all a tad early in their festive (lack of) adoration for the European currency.

It’s hard to suggest an alternative route as clearly the short positions are increasing and pull backs are likely to provide an opportunity for earlier non-believers

US DATA: The ABC News Consumer Comfort Index was -45 in the
Nov 28 week vs -47 in the previous week. The nat’l econ index was
-76 vs -80 in the previous week and the personal finances index
was unchanged at -12 vs previous week. The buying climate index -46
vs. -48 in the previous week. See the history table on the MNI main
wire.

• S&P puts Portugal on creditwatch negative; may cut A- long-term sovereign rating
• Chicago PMI rises to 62.5 in November from 60.6 in October, highest since 2005
• Canadian GDP falls to 1.0% in Q3 from 2.3% in Q2
• US consumer confidence rises to 54.1 in November from 49.9 in October
• Case Shiller home price index falls
• Japan tells China no six-party talks on N Korea
• German “wiseman” Bofinger: Risks to euro are enormous
• Trichet: More than ever, we need a sense of direction. The situation will continue to be demanding for a period of time
• S&P 500 falls 0.6%, US 10-year notes fall 3 bp to 2.80%

Another down day for the euro with some month-end volatility thrown in to spice things up. EUR/USD fell as low as 1.2969 during the US morning as Spain, Italy, Belgium, etc were in focus, as was France for a time. Rumors circulated of a French downgrade several times today, only to be denied by both Moody’s and S&P.

Trichet did little to boost confidence in an appearance before the European Parliament. He cast doubts over several elements of the recent reform package and blamed politicians in the euro zone for talking out of school. He moaned that Europe needs a sense of direction while backing away from vows to tighten extra-ordinary liquidity measures.

European sovereign dent stress indicators closed below their worst levels but the late afternoon S&P action on Portugal will likely send them soaring tomorrow morning.

1.2950 barriers are noted as well as 1.2900s. Offers are seen at 1.3040/45 near-term.

USD/JPY was hammered as low as 83.43 in US trade today. Risk aversion stemming from the very unsettled North Korean situation, EUR/JPY selling and lower US yields, especially at the short-end of the curve, helped weigh on the greenback. 83.38 is key support, the 61.8% retracement of the recent 82.75/84.40 rally.

GBP/USD continues to outperform as EUR/GBP slides further by the day. Like the dollar, the pound is losing the daily ugly contest to its sister the euro.

GBP/JPY was in brief demand for month-end rebalancing, helping send that cross a JPY higher around the 16:00 end-of-month fix.

Poor Canadian GDP data helped boost USD/CAD above 1.0250 today while extended its decline modestly, bottoming at 0.9548 this morning before recovering to 0.9625 late in London. It closes at 0.9590.

WASHINGTON (MNI) – The following are items of interest Tuesday
relating to the pending congressional vote on whether to extend Bush era
tax cuts and to the deficit:

* The co-chairmen of the National Commission on Fiscal
Responsibility and Reform, former senator Alan Simpson and former White
House chief of staff Erskine Bowles, said Tuesday that they will release
a revised deficit reduction plan Wednesday that calls for nearly $4
trillion in budget savings over a decade. At a news conference, Simpson
and Bowles said they will release a revised plan that attacks the
nation’s serious deficit problems. They said they will call on their 18
person panel to vote on the plan Friday. Both said they have no idea if
it will secure the 14 votes that are required to bring it to the floor
of the House and Senate for its consideration.

* Senate Majority Leader Harry Reid said Tuesday that he hopes the
tax cut negotiations between Congress and the White House “come up with
a bipartisan proposal,” but then added that he still wants the Senate to
vote on a middle class tax cut plan. In comments after a Senate
Democratic party luncheon, Reid said “the number one priority” of
Democrats is to “protect the middle class.”

* Speaking moments before Reid, Senate Majority Whip Dick Durbin
said that he “assumed” there would be no Senate votes on tax plans while
the talks on the Bush tax cuts continue. Durbin also said it was
“absolutely essential” that an extension of unemployment insurance be
part of any tax cut agreement.

* Senate Majority Leader Harry Reid said Senate Finance Committee
Chairman Max Baucus will represent Senate Democrats in the tax cuts
talks. House Republican leader John Boehner has appointed Rep. David
Camp, the incoming chairman of the House Ways and Means Committee, to
represent House Republicans. Senate Republican leader Mitch McConnell
has appointed Senate Minority Whip Jon Kyl to represent Senate
Republicans in the talks.

* President Obama, after meeting with both Democratic and
Republican congressional leaders Tuesday said he is appointing Treasury
Secretary Tim Geithner and Budget Director Jack Lew to negotiate how to
extend the Bush-era tax cuts. He said he felt there is agreement with
Republican leaders not to exploit disagreements for the sake of sound
bites, but to actually move forward toward solutions, not only on taxes,
but on ratification of the nuclear weapon non-proliferation treaty.
“None of this is going to be easy,” Obama said. “There are two parties
for a reason.”

* Said Obama, “They understand these aren’t times for us to be
playing games.” He said the next election is two years away and “right
now, we’re facing some very serious challenges. We share an obligation
to meet them and that will require choosing the best of our ideas over
the worst of our politics.”

* House Republican leader John Boehner and Senate Republican leader
Mitch McConnell said Tuesday after that meeting with President Obama
that they believe Congress will be able to reach an agreement with the
White House on extending the Bush era tax cuts. Speaking to reporters
from Boehner’s office, the two GOP leaders said the agreement they will
accept would extend all of the Bush era tax cuts, but hinted the length
of the extension will be the primary focus of the talks.

* Senate Minority Leader McConnell said that Congress must “first
resolve” the fate of the Bush tax cuts and a fund bill for the 2011
fiscal year in the Lame Duck session, before taking up any other
matters. In a briefing after a Senate Republican policy luncheon,
McConnell said that he is appointing his deputy, Sen. Jon Kyl, to
represent Senate Republicans in the coming tax talks with the White
House.

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: M$U$$$,MFU$$$,MCU$$$]

–Bowles And Simpson To Release Revised Plan Wed, Vote On Friday
–Bowles: ‘A Partial Solution Is Not Going To Help Us’
–Bowles: Revised Plan Will Be ‘Better, Stronger’
–Simpson: U.S. Has A ‘Serious Problem’
–Simpson: Deficit Panel Has ‘Done Our Level Past’

By John Shaw

WASHINGTON (MNI) – The co-chairmen of the National Commission on
Fiscal Responsibility and Reform, former senator Alan Simpson and former
White House chief of staff Erskine Bowles, said Tuesday that they will
release a revised deficit reduction plan Wednesday that calls for nearly
$4 trillion in budget savings over a decade.

At a briefing, Simpson and Bowles said they will release a revised
plan that attacks the nation’s serious deficit problems.

They said they will call on their 18 person panel to vote on the
plan Friday.

Both said they have no idea if it will secure the 14 votes that are
required to bring it to the floor of the House and Senate for its
consideration.

“America, you have a serious problem,” Simpson said of the nation’s
deficit predicament.

“We have worked hard … . We have done our level best,” he said.

“The problem is real, the solutions are painful, there are no easy
choices,” Bowles said.

“This is the moment of truth,” Bowles said.

Bowles said he hopes his panel has focused the attention of the
American people on the nation’s dire fiscal problem.

“The era of deficit denial in Washington is over,” he said.

Bowles said they have decided not to offer a milder plan to attract
more support.

“A partial solution is not going to help us,” Bowles said, adding
the new plan will be “better, stronger.”

Their initial draft would bring the federal budget deficit down to
2.2% of gross domestic product by 2015. It would reduce the nation’s
debt to 60% of GDP by 2024 and to 40% of GDP by 2037.

But to achieve these fiscal goals it would force sweeping, even
fundamental, changes to the federal budget — changes far beyond what
any Congress or administration has even contemplated, let alone
accepted.

The plan would wring deep savings out of every corner of the
federal budget, including defense and Social Security.

The Bowles-Simpson plan would put in place tough discretionary
spending caps that would help achieve about $1.4 trillion in savings. It
calls for $733 billion in entitlement savings and $751 billion in
savings from overhauling tax expenditures over a decade.

The plan calls for fiscal changes that would bring federal spending
down to about 21% of GDP and boost revenues to bring them up to 21% of
GDP. The plan would balance the federal budget by 2037.

President Obama created the commission on Feb. 18 by executive
order after an attempt by lawmakers to create a panel by statute failed
in the Senate.

The commission is charged to issue a report by Dec. 1 that would
cut the deficit to about 3% of gross domestic product by fiscal year
2015 and begin slowing the growth of debt over the long term.

In order for the panel to issue recommendations, 14 of the 18
members need to reach an agreement.

The commission includes the chairmen and ranking members of the
Senate and House Budget committees, the chairman of the Senate Finance
Committee, and a former White House budget director and vice chairman of
the Federal Reserve Board.

It also includes some of the fiercest partisans of recent budget
battles, including five congressional Republicans who appear to believe
that tax increases should be off the table for fixing the U.S.’s fiscal
challenges and several Democrats who say that all key social programs
should be kept off limits.

** Market News International Washington Bureau: (202) 371-2121 **

[TOPICS: M$U$$$,MFU$$$,MCU$$$]

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