Falling off fiscal cliff will cause US recession
A new report published by the Congressional Budget Office indicates that falling off the fiscal cliff would mean 3 percent less output for the US economy and unemployment would rise to 9.1 percent. The Financial Times reports that the CBO report, a non-partisan independent entity, indicates that scrapping the tax cuts passed by former President Bush would lower output by 1.4 percent and decrease jobs by 1.8 million in 2013. Spending cuts on defense would cut 400,000 jobs and lower output by 0.4 percent. Letting the payroll tax cut expire would impact jobs by 800,000 and lower output by 0.8 percent. To reduce the deficit entirely would require a 20 percent increase in government revenues. The Dow fell 121 points on Thursday to close at 12, 811.
ECB open to rate cut and done with Greece
European Central Bank President Mario Draghi said on Thursday that he is leaving open the possibility of an interest rate cut in the months ahead. Reuters also indicates that Draghi indicated that there is not much more the ECB can do for Greece and refuses to take a haircut on Greek bonds. Draghi also did not promise to bring down Spain’s debt costs.
Sales at McDonald’s drop
McDonald’s same store sales dropped 1.8 percent in October, the first monthly sales drop since 2003. The Wall Street Journal indicates that higher margin drinks such as smoothies have helped grow revenues in the past but the austerity measures in Europe are impacting growth. Additionally, Burger King and Wendy’s are revamping their marketing campaigns and menus to compete more effectively with McDonalds.
Iran bans luxury imports such as toilet paper
The Associated Press reports that Iran has placed a ban on 75 so-called luxury products ranging from high end cars to coffee to toilet paper. The ban is part of an effort to promote domestic goods and prevent the outflow of dollars as the Western economic pressures, due to the sanctions, choke off Iran’s commerce and oil revenue. Iran makes most of these products domestically but consumers often prefer the higher quality European imports.
Nordstrom’s 3rd quarter profit rises 15 percent
Nordstrom reported a 15 percent increase in third quarter net income fueled by strong demand for men’s shoes, men’s clothing and children’s fashions, according to the Associated Press. The upscale department store chain earned $146 million or 71 cents per share, compared to $127 million, or 59 cents per share a year ago. Analysts had expected higher earnings per share.
India’s Golden Trading Day
The national exchanges in India are holding a special trading session on Sunday just for gold exchange-traded funds. The Wall Street Journal reports that Sunday is the first day of the Hindu festival of Dhanteras. The day is associated with wealth and gifting. The Bombay Stock Exchange and the National Stock Exchange will all trading in gold ETFs between 11am and 3:30 pm. A gold ETF is like a stock and its price movement is meant to correspond to the price of physical gold. The event is meant to steer Indians, who have a strong appetite for gold, into paper gold rather than physical gold.
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.