Recap 1-2-13


The next headline risk is the possible federal government shutdown in late Feb / early March. With data stable / improving, this suggests that risk on can persist for the time being.


  • Last night both Houses of Congress voted and approved a bill to end the fiscal cliff standoff. Taxes go higher for individuals earning above $400k and families above $450k. Capital gains and dividend tax rates are now 20% from 15% (plus the affordable care tax of 3.8% for certain income brackets). Personal exemptions will be phased out for individuals making above $250k. The sequester debate is delayed for two months. Unemployment benefits were extended for one year. The AMT is now indexed to inflation. Boehner voted yes, but his top deputies, Majority Leader Eric Cantor of Virginia and Majority Whip Kevin McCarthy of California, voted no.
  • US ISM improved to 50.7 in Dec vs 50.5 exp and 49.5 prev
  • UK Mfg PMI jumped to 51.4 in Dec vs 49.1 exp and 49.2 prev
  • Italy Mfg PMI improved to 46.7 vs 45.3 exp and 45.1 prev
  • FT: Average fund is said to have gained ~5% in 2012

Upcoming Data:

  • Thu: China Non-Mfg PMI, German Unemployment, US ADP Employment, Jobless Claims, China HSBC Service PMI
  • Fri: Italy Services PMI, UK Services PMI, US Employment, Canadian Employment, US ISM Non-Mfg
  • Mon: Australia Trade Balance
  • Tue: EU Economic Confidence
  • Wed: Canada Housing Starts