Eurozone factory output falls by largest number in four years
Output from Euro zone factories in September fell by the largest amount since January 2009, according to CNBC. Industrial production within the Euro zone fell 2.5 percent in September, worse than expectations of 1.9 percent. The data adds to the belief that the European economy will contract by at least 0.4 percent by year end, clearly signifying a recession. Asian markets were mixed on Wednesday while European markets are mostly down. The Dow fell 58 points on Tuesday to close at 12,756.
Obama to start negotiations on tax rate at double the amount previously agreed upon
The Wall Street Journal is reporting that President Obama will begin negotiations regarding the fiscal cliff by demanding $1.6 trillion in additional tax revenue. This is double the amount of $800 billion he previously agreed to with Republican leaders. Obama is ready to let the Bush era tax cuts end for households with over $200,000 of annual income ($250,000 for a couple). Senate majority leader, Harry Reid, reiterated the President’s position. Obama is expected to hold a news conference to state his positions. Clearly any hope for compromise seems slim.
Anti-austerity strikes sweep Europe
Protesters in Portugal and Spain coordinated riots against austerity today with millions of workers protesting spending cuts that they believe have made the economy worse. Reuters reports that hundreds of flights have been cancelled, factories and ports are at a standstill and trains are barely running in Spain and Portugal. In Rome, students pelted police with rocks. In Belgium, Greece, Italy and France, rail services were disrupted due to planned work stoppages. All of the protests are part of “European Day of Action and Solidarity”. More protests are planned for this evening.
Samsung phones outsell Apple in Q3
According to CNBC, Samsung sold more smartphones in the third quarter of 2012 than Apple, as consumers postponed purchases in anticipation of iPhone 5. A Gartner research report indicates that smartphone sales surged 46.9 percent to 169.2 units compared to a year ago. The Samsung Galaxy phones commanded 32.5 percent of all sales. Apple sold 14 percent of all smartphones. Together the two competitors controlled almost half of all smartphone sales. Apple is expected to dominate fourth quarter sales due to the iPhone 5 rollout.
Companies warn about Layoffs due to Fiscal Cliff
Some big American companies will lay off workers and pay lower dividends if Congress and Obama cannot avoid the fiscal cliff, according to theWall Street Journal. A number of businesses, including defense contractors and hospitals, will be directly affected by the $600 billion in government cuts. Military gear companies such as United Technologies and Oshkosh Corp. have already been cutting jobs due to anticipated cuts in defense spending. Lockheed Martin, the world’s biggest defense contractor, will be forced to dismiss 10,000 employees due to the fiscal cliff.
Fed officials back interest rate threshold strategy
Vice Chairman of the US Federal Reserve, Janet Yellen, has become the most senior official to endorse a “threshold strategy” for low interest rates and is suggesting that the Fed is moving closer to the adoption of this strategy. According to the Financial Times, a threshold strategy would tie interest rates to an economic condition, such as unemployment rates falling below 7 percent. The policy could be put in place as early as December. She did not indicate whether the rate would be tied to unemployment, inflation or any other economic conditions.
Thanksgiving travel to increase
The AAA predicts that slightly more Americans will hit the road this Thanksgiving than last, especially those who are driving rather than flying due to tight household budgets. The Associated Press indicates that AAA believes 43.6 million Americans will travel at least 50 miles from home, up just 0.7 percent from 2011. Travel grew 8 percent and 6 percent respectively over the last two Thanksgiving holidays, but AAA says it will take a stronger economy to spur a significant jump in the future. This year’s travel is still 26 percent below the peak in 2005 and 14 percent below 2007. Only 3.14 million will fly this holiday compared to 3.2 million last year.
French superstar buys mansion in Belgium to avoid French taxes
French actor, Gerard Depardieu, has purchased a mansion in Belgium, just one mile away from the French border, to avoid the French tax rate. According to CNBC, Depardieu is one of a number of wealthy French who have left the country to avoid the new 75 percent tax rate on those with incomes over $1 million euros ($1.27 million). Belgium’s tax rate is 50 percent for households with over 35,000 euros of annual income.
Diamond commands $21.5 million in auction
Christie’s auctioned off the Archduke Joseph Diamond on Tuesday night and received $21.5 million, according to USAToday. That sets a world record for price per carat. The diamond is 76.02 carats and has perfect cut and clarity. The buyer wishes to remain anonymous but will place the diamond in a museum. The diamond was named for Archduke Joseph August of Austria, the great-grandson of a Holy Roman emperor and French king. The diamond passed to his son, who put it in a bank vault. An anonymous buyer kept it safe during WWII and then it reappeared at a London auction in1961. That buyer sold it at auction in 1993 for $6.5 million. But not all of the diamonds put up for auction sold last night because they were under the minimum bid price. The auction is being held at 5 hotels in Geneva.
Catherine S. McBreen is President of Millionaire Corner. McBreen plans and develops content for Millionaire Corner. Catherine balances editorial content to meet the informational needs of both new and seasoned investors. She designs special monthly surveys on topical issues affecting the economic environment.
McBreen has a B.S. in speech communications from Northwestern University and a J.D. from DePail University College of Law. She is a member of the American Bar Association, the Illinois Bar Association, and the Chicago Bar Association.
Well-known for her expertise in the affluent and retirement arenas, McBreen is a frequent speaker at industry conferences. She has been quoted widely by the financial media, including The Financial Times, The Wall Street Journal, Research, Private Asset Management, On Wall Street, Reuters, Bloomberg News, The Dow Jones Newswires and Worth. Cathy has appeared as a guest on CNBC Closing Bell, First Business Morning News, Neal Cavuto at Fox Business News, ABC and CBS radio.
McBreen is co-author with Spectrem President George H. Walper, Jr. of the book "Get Rich, Stay Rich, Pass It On: The Wealth-Accumulation Secrets of America's Richest Families" (Portfolio, January 2008)
Catherine is the mother of four and is involved in many school and community events.