Unless Democrats and Republicans hammer out a deal today, the country will indeed go over the dreaded fiscal cliff.
At midnight tonight, a host of legislation will expire. The two-year payroll tax holiday that benefits literally every person with a job will lapse, as will the patch on the alternative minimum tax. 160 million workers will see their payroll tax revert to 6.2% from 4.2%. Farm subsidies will disappear, possibly sending the price of a gallon of milk up as high as $8. Even relief for Hurricane Sandy victims will dry up tonight.
Despite the impending changes, it appears that the cliff itself is already priced in, as stock markets are calm before the opening bell. Dow
(INDEXDJX:.DJI) futures were up 0.09% at 12,789. Futures contracts on the S&P 500
(INDEXSP:.INX) rose 0.22% to 1,386.40 and Nasdaq
(INDEXNASDAQ:.IXIC) futures slipped 0.10% to 2,583.50.
Asian stocks ended the year in positive territory. Chinese equities rose after HSBC's manufacturing PMI for the country rose to 51.5 this month, up from 50.5 last month. This represents the fastest expansion of Chinese industry in 21 months and beat expectations. (Readings above fifty signal an increase in business activity in the sector.)
The Dallas Fed's manufacturing survey will come out later this morning. The area's business activity index is expected to improve to 1 for December from -2.8 last month.
Bank regulators are pursuing a $10 billion settlement with fourteen major banks over abusive foreclosure practices such as excessive fees and faulty paperwork. $3.75 billion of the deal, according to the New York Times,
will actually go to people who lost their homes. In February, big banks paid a $26 billion settlement, and only $1.5 billion went toward homeowner relief. JPMorgan Chase
(NYSE:JPM), Bank of America
(NYSE:BAC), Wells Fargo
(NYSE:WFC), and Citigroup
(NYSE:C) are among the banks that will help homeowners refinance, lower loan principal, and donate abandoned homes. Under the new deal, the costly review of four million loan documents will end.
German Chancellor Angela Merkel warned her country that the economy could be more difficult in the coming year. French President Francois Hollande's controversial tax on the wealthy was struck down this weekend by the country's highest court. As he promised in his campaign for office, French with incomes over 1 million euros were to be taxed at 75%. The court found the law's design to be unconstitutional.
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