Italy Parliament Votes to Seal Austerity Budget

Italy's Senate passed a vote of confidence in the government of Prime Minister Mario Monti on Thursday that put the final seal on an emergency austerity budget rushed through to restore market confidence in the euro zone's third biggest economy.

The upper house voted 257 to 41 for the government, following a similar easy win in the lower house last week.

Monti, said he was happy with the vote and Italy could hold its head high in Europe after passing the package of spending cuts, tax rises and pension reform.

The budget is intended to reverse a collapse of market confidence which has pushed Italy's borrowing costs to untenable levels and put it at the heart of Europe's debt crisis.

Addressing the Senate before the vote, Monti said his technocrat government had to push through the budget as fast as possible.

"Today this chamber concludes a rapid, responsible, complex job...on a decree that was passed in extreme emergency and that enables Italy to hold its head high as it faces the very serious European crisis," Monti declared.

The prime minister, appointed only five weeks ago, said that after addressing Italy's massive debt in the 33 billion euro ($43 billion) budget, the government would turn to the country's second economic millstone, a decade of near zero growth.

Investors turned their spotlight on these two problems in July, sending Italy's borrowing costs rocketing.

Monti replaced Silvio Berlusconi as prime minister last month and formed an administration of technocrats with broad parliamentary support to pass the so-called "Save Italy" decree.

Berlusconi's failure to tackle major reforms and restore market confidence brought Italy to the brink of economic catastrophe, although market pressure has continued since Monti took power.

Monti Calls for Growth

Monti repeated a frequent refrain over recent weeks, that European policy must address growth as well as cutting debt.

Euro zone paymaster Germany has insisted that policy should concentrate on fiscal discipline despite fears by both indebted countries and economists that this will choke off essential growth if taken too far.

The government previously passed the budget in the lower house with a confidence vote last week to eliminate debate on dozens of amendments, many of them brought by the opposition Northern League, which was part of Berlusconi's administration.

League deputies blew referees' whistles and held up a banner reading "Robber Government" in an attempt to disrupt calling of the confidence vote in the Senate on Wednesday.

The votes in both houses allowed the broad swathe of parties supporting Monti to show they are backing him out of a sense of responsibility even if they are uneasy with specific measures.

Berlusconi's People of Liberty Party (PDL) is worried about tax increases and the centre-left Democratic Party about pension cuts, but they know they cannot sabotage the bill without unleashing an economic disaster including a possible default.

In a reference to serious tension in recent days between the government and trade unions over labour market reform, Monti said the issue would need more detailed dialogue with both them and employers before it was decided.

A suggestion by Welfare Minister Elsa Fornero this week that the government could take measures making it easier to fire workers caused a union outcry and she has since acknowledged she was "naive" to suggest it before more detailed discussion.

The severity of Monti's package has taken a toll on his popularity, which fell to 46 percent from 61 percent the previous week, according to a poll published in Corriere della Sera on Sunday.

Berlusconi has promised Monti full support but expressed fear that "the horse's medicine could kill the horse", a reference to widespread fears that the budget could stamp out fragile growth.

Monti says markets will eventually react positively to Italy's efforts, arguing that lower interest rates will help offset the effects of the austerity measures on growth.

While bond yields have come down, with the 10-year issue steadily below 7 percent, the austerity package has failed to bring them back to more sustainable levels of about 5 percent.

Last week, ratings agency Fitch placed Italy and five other euro zone countries on a downgrade warning in the absence of a "comprehensive solution" to the debt crisis.

Italy's economy has expanded by an average of only 0.4 percent per year for the past decade.

It shrank 0.2 percent in the third quarter of this year, compared with 0.5 percent growth in Germany and 0.4 percent in France, and economists don't predict a recovery until the second half of next year.

The main employers' lobby, Confindustria, predicts a 1.6 percent decline in gross domestic product in 2012, four times worse than the government's forecast.

Monti's budget went into effect on Dec.4, when it was passed by the cabinet, but needed parliamentary approval within 60 days to become permanent.

http://www.cnbc.com/id/45763123

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http://www.bde.es/webbde/en/cenbal/cenbal.html

City Controller John Liu says Wall St. execs should be responsible for risky deals

Embattled City Controller John Liu wants to hold financial fat cats accountable if their firms’ wheelings and dealings get out of control.

He demanded on Wednesday that three major investment firms — Goldman Sachs, JPMorgan Chase and Morgan Stanley — recoup pay from senior executives if employees engage in risky or unethical behavior.

“No one should profit or be rewarded with bonuses when engaged in improper or unethical behavior,” Liu said.

The controller noted that each of the three firms has paid more than $100 million in the past 18 months to settle state or federal charges connected to mortgage securities.

Liu’s demands do carry some weight in the financial world. He oversees the city’s $108 billion pension funds, which, as of Dec. 19, held $483.3 million worth of shares in the three firms.

The boards of the three firms would have to vote on his suggestions.

Liu’s campaign has had some financial trouble of its own.

A Liu intermediary who was raising dollars for his 2013 mayoral bid was indicted by federal prosecutors last month.

Xing Wu (Oliver) Pan was charged with recruiting 20 straw donors to help an undercover agent posing as a businessman skirt campaign finance laws.

Liu has not been charged with any wrongdoing, but the feds are still looking at his fund-raising.

http://www.nydailynews.com/new-york/city-controller-john-liu-wall-st-execs-responsible-risky-deals-article-1.995278

Jobless Claims in U.S. Fall, Consumer Comfort Climbs: Economy

Fewer Americans than expected sought jobless benefits and consumer confidence climbed, giving the world’s largest economy a boost heading into 2012.

Unemployment claims fell by 4,000 to 364,000 in the week ended Dec. 17, the lowest level since April 2008, Labor Department figures showed today in Washington. The Bloomberg Consumer Comfort Index improved to minus 45 in the period ended Dec. 18 from a reading of minus 49.9 the prior week, marking the biggest seven-day gain since January.

A decline in firings and the cheapest gasoline prices since February are helping revive retail sales during the busiest shopping season of the year. A stronger consumer, whose spending accounts for 70 percent of the economy, raises the odds the U.S. can ride out the debt crisis in Europe or failure by Congress to extend tax cuts.

“Spending has looked pretty good so far, and continued job and income growth will help maintain that,” said Samuel Coffin, an economist at UBS Securities LLC in New York, who projected claims would fall to 365,000. “At some point, events in Europe are likely to have some effect on activity, but we’re heading into that headwind with a lot of momentum.”

Stocks rose on the improving jobs outlook, sending the Standard & Poor’s 500 Index higher for a third day. The gauge increased 0.4 percent to 1,249.03 at 11:32 a.m. in New York. Treasury securities also advanced, sending the yield on the benchmark 10-year note down to 1.96 percent from 1.97 late yesterday.

Survey Results

The median forecast of 45 economists surveyed by Bloomberg News projected an increase in jobless claims to 380,000. Estimates ranged from 355,000 to 400,000. The number of applications has dropped by 40,000 over the past three weeks.

“This is great news,” Ian Shepherdson, chief U.S. economist at High Frequency Economics Ltd. in Valhalla, New York, said in a note to clients. “One unexpectedly low number can easily be a fluke. Two are interesting. Three are telling us something real is happening in the labor market.”

The decrease in claims is consistent with payroll gains of about 200,000 a month, Shepherdson said.

The number of people continuing to receive jobless benefits fell by 79,000 in the week ended Dec. 10 to 3.55 million, the lowest since September 2008.

In data out of Europe, economic growth in the U.K. accelerated more than previously estimated in the third quarter in a surge that the Bank of England says is unlikely to be repeated as Europe’s debt crisis curbs bank lending and dents confidence. Gross domestic product rose 0.6 percent from the previous quarter, faster than the 0.5 percent reported last month, the Office for National Statistics said today in London.

Confidence Boost

The drop in firings in the U.S. may be helping boost confidence. The Bloomberg comfort index rose last week to the highest level in five months as all three components -- state of the economy, buying climate and personal finances -- improved.

A monthly expectations gauge climbed to minus 17 for December, a seven-month high.

“A slower pace of firing and stabilization in the broader labor market are the likely sources for bolstered consumer sentiment,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “While challenges remain, it’s a solid note to close what has been an otherwise discordant 2011.”

The figures are consistent with other findings. The Thomson Reuters/University of Michigan final index of consumer sentiment climbed to 69.9 in December, a six-month high, from 64.1 at the end of November, the group said today.

Cheaper Gasoline

Lower fuel costs are probably also helping lift confidence. The price of regular unleaded gasoline at the pump decreased to $3.21 a gallon Dec. 20, its lowest since February, according to AAA, the biggest U.S. auto group.

Pier 1 Imports Inc. is among retailers seeing a pickup in sales at the start of the holiday shopping season without resorting to bigger price cuts.

“Sales are robust, merchandise margins are strong, operating margins are growing,” Alexander Smith, president and chief executive officer at Pier 1, said on a Dec. 15 conference call. Sales during the Thanksgiving weekend “increased 10 percent from last year and were achieved with modest levels of discount.”

FedEx Corp. posted quarterly profit that beat analysts’ estimates, helped by stronger demand for home delivery.

More Shipments

“Consumer confidence remains at very low levels, but we have seen improvement recently,” Mike Glenn, executive vice president for market development at Memphis, Tennessee-based FedEx, said on a Dec. 15 earnings call. For 2012, “we expect U.S. GDP to grow 2.2 percent.”

The economy grew less than previously estimated in the third quarter, reflecting a smaller gain in consumer spending, revised figures from the Commerce Department showed today. Gross domestic product climbed at a 1.8 percent annual rate from July through September, down from the 2 percent estimated last month.

The index of leading economic indicators signals the economy will strengthen.

The New York-based Conference Board’s gauge of the outlook for the next three to six months rose 0.5 percent after a 0.9 percent October increase, the research group said today.

Cuts in government spending and failure by Congress to extend tax reductions represent clouds on the horizon. The U.S. House of Representatives rejected this week carrying over into 2012 an expiring 2 percentage-point payroll tax cut and benefits for the long-term unemployed. Should those measures not be prolonged, GDP growth next year will be cut by about 0.6 percentage point, economists at IHS Global Insight estimate.

http://washpost.bloomberg.com/Story?docId=1376-LWLXI00UQVIR01-5GFT35MR02QJ90EMNG03F2GDRL

Growth figures reveal challenges

The challenges faced by the global economy were underlined today by mixed growth figures from both sides of the Atlantic.

The UK economy grew at an upwardly revised rate of 0.6% between July and September, but the estimate for gross domestic product (GDP) growth in the second quarter was slashed to 0% from 0.1%, the Office for National Statistics reported.

Meanwhile, the US economy grew more slowly in the third quarter than previously estimated but economists said the world's largest economy is set to record a strong finish to the year.

Back in Britain, analysts warned the UK was still teetering on the brink of recession, despite the improved third quarter figures, which were revised up from a previous estimate of 0.5%, as indicators point towards a slowdown as the new year approaches.

The overall picture at home was broadly unchanged by the revised figures as the country still faces considerable headwinds in the new year, notably from the eurozone, the UK's biggest trade partner, which is buckling under the pressure of a crippling debt crisis.

Chris Williamson, chief economist at financial services information company Markit, said: "The underlying trend is very clearly one of an economy that is struggling in the face of what seems to be an ever-growing list of headwinds."

Manufacturing, services and trade surveys have been mixed so far in the final quarter of the year, prompting fears that the UK is heading for a double-dip recession.

The tax and spending watchdog, the Office for Budget Responsibility, recently slashed official forecasts for growth following a similar downbeat assessment of the economy from the Bank of England.

The powerhouse services sector, which makes up some 75% of the total economy, grew at 0.7% in the third quarter, up from a previous estimate of 0.6%.

Agriculture grew at 0.5% in the third quarter while construction was ahead 0.3%.

But industrial production growth was revised down once again to 0.2% from 0.4%, which partially offset improvements in the stronger sectors.

The squeeze on household spending was underlined by figures revealing real disposable income growth slowed to 0.3% in the third quarter from 1.3% the previous three months.

Government spending was also revised down to 0.2% from 0.9% - which corresponds more closely with Chancellor George Osborne's programme of deficit-busting spending cuts.

Looking back to the second quarter, growth in the services sector was revised down to 0.1% from 0.2%.

Labour Treasury spokeswoman Rachel Reeves said: "These revised figures show an unchanged picture over the last year. The British economy has been flatlining over the last 12 months, when we need strong growth to get unemployment and the deficit down."

There is some hope that the improved outlook for the US will help steer the global economy to safer ground, although America is also threatened by the potential fallout from a euro meltdown.

The US government now estimates that consumer spending grew at a 1.7% annual rate last summer, instead of 2.3%. The updated estimate reflects data showing less spending on hospitals.

The US third quarter figures were lower than estimated - but were still the best quarterly figures this year, following growth of 1.3% in the second quarter.

However, economists think the economy is growing at an annualised rate of more than 3% in the final three months of this year, which would be the fastest pace since a 3.8% performance in the spring of 2010.

The upturn in the economy comes as President Barack Obama faces a re-election vote in less than a year and a presidential campaign that will focus on the economy.

The President may face voters next year with the highest unemployment of a sitting president seeking election since World War Two.

http://www.independent.co.uk/news/business/news/growth-figures-reveal-challenges-6280474.html

Stocks Up Moderately In Lower Trade; Mead Johnson Dives

Stocks held their modest gains at midday Thursday, as volume continued to track lower across the board.

The Nasdaq rose 0.6%, while the S&P 500 gained 0.5%. The Dow Jones industrial average tacked on 0.3%.

On the downside, Mead Johnson Nutrition (MJN) tumbled 8% in huge turnover, hit by news of Wal-Mart (WMT) pulling a batch of the infant formula maker's Enfamil product after the death of an infant. Reports said there was no known link between the infant's death from a bacterial infection and Enfamil, which tested negative for the bacterium, but Wal-Mart was pulling the formula "out of an abundance of caution."

Mead Johnson has plunged below its 50-day moving average, after closing near an all-time high Wednesday. It has an IBD Composite Rating of 78 out of a highest-possible 99.

On the upside, Advance Auto Parts (AAP) gained 1% in fast trade after being up as much as 3% earlier. The stock has sketched a 71.10 handle buy point in a first-stage base. The car parts retailer has a Composite Rating of 96, putting it above all but 4% of the market. Advance also is part of a top-rated IBD industry group.

Intuitive Surgical (ISRG) jumped 1% in above-average volume, as it worked on clearing a 449.16 buy point from a base-on-base pattern. The maker of robotic surgical gear briefly topped 449.16 and touched 450, a new all-time high, but then gave up some of its gain. Intuitive sports a 99 Composite Rating.

http://news.investors.com/Article/595591/201112221153/stock-market-today-rises-mjn-aap-isrg.htm

Japan Exports Down 4.5 Percent, Imports Up 11 Percent

Country's trade deficit expanded for second straight month to $8.79 billion

Japan’s trade deficit expanded for the second straight month to $8.78 billion in November, as exports fell 4.5 percent year-over-year and import jumped 11.4 percent, according to preliminary figures released by the Finance Ministry Wednesday.

The country’s trade gap widened from $3.59 billion in October. Japan posted a $2.02 billion trade surplus in November 2010.

The export decline was led by electronic parts, including semiconductors, visual equipment and steel, which tumbled 15.1 percent, 48.5 percent and 9.2 percent, respectively, in terms of value.

Import growth, rising for the 23 months in a row, was fueled by liquefied natural gas , crude oil and telecommunications equipment, which soared 76.0 percent, 15.1 percent and 42.7 percent, respectively, in terms of value.

Until September, Japan’s overall exports had grown for two months in a row on a year-over-year basis after five months of declines, reflecting the restoration of supply chains disrupted by the catastrophic earthquake and tsunami that hit the northeastern part of the country on March 11.

Japan’s exports to the United States rose for the first time in two months in November on a year-over-year basis, increasing 2 percent to $11.37 billion. Imports from the U.S. fell for the first time in four months, dropping 0.8 percent to $6.51 billion.

As a result, Japan’s trade surplus with the U.S. widened for the first time in three months in November on a year-over-year basis, expanding 5.9 percent to $4.86 billion. The U.S. is now Japan’s second-largest trading partner after China.

http://www.joc.com/importexport/japan-exports-down-45-percent-imports-11-percent