"Fiscal cliff" drag on economy less than feared so far

WASHINGTON (Reuters) - The U.S. economy showed surprising signs of resilience in November despite the approach of the so-called fiscal cliff as consumer spending rose by the most in three years and a gauge of business investment jumped.
Consumer spending rose 0.6 percent when adjusted for inflation, while new factory orders for capital goods outside the defense and aerospace sectors - a proxy for business spending plans - jumped 2.7 percent, the Commerce Department said on Friday.
Economists had pinned earlier weakness in investment plans on worries lawmakers and the White House might fail to strike a deal to avoid the brunt of tax hikes and government spending cuts scheduled to begin in January.
They also worried consumers would hold back as the end-of-the-year deadline approached with both parties far apart on how to avoid the potential hit to the economy. But Friday's data suggested both consumers and businesses had mostly shrugged off the cliff, at least in November.
"It appears that the looming fiscal cliff hasn't been nearly as disruptive as we had feared," said Paul Ashworth, an economist at Capital Economics in Toronto.
Still, another report provided ample reason for caution as U.S. consumer sentiment slumped in December, with households apparently rattled by on-going negotiations to lessen the fiscal tightening that could easily trigger a recession next year.
The Thomson Reuters/University of Michigan's final index of consumer sentiment in December tumbled more than expected to 72.9 from 82.7 a month before.
U.S. stocks fell sharply after a Republican proposal for averting the fiscal cliff was abandoned late on Thursday, eroding optimism that a deal could be reached quickly. At the same time, U.S. government debt prices rallied and the dollar gained ground as investors sought a safe haven.
Economists still expect economic growth to cool in the fourth quarter as companies slow the pace at which they have been re-stocking their shelves, but the data on Friday suggested consumers are offsetting some of that drag.
Consumer spending is on track to grow at a 2.2 percent annual rate in the fourth quarter, faster than during the prior three months, said Michael Feroli, an economist at JPMorgan in New York.
Forecasting firm Macroeconomic Advisers raised its forecast for fourth-quarter economic growth by four tenths of a point to a 1.4 percent annual rate. In the third quarter, the economy expanded at a 3.1 percent rate.
"The economy is holding in here at the end of the year despite the concerns about the fiscal cliff," said Gary Thayer, an economic strategist at Wells Fargo Advisors in St. Louis.
WORRIES AHEAD
Those concerns are not going away.
In November, many analysts on Wall Street said they expected Washington would largely avert the fiscal cliff, and optimism had grown over the last week that a deal was within reach. Since Wednesday, however, negotiations have fallen into disarray.
If Congress and the White House do not reach a deal in time, taxes will go up for all Americans beginning in January and the government will cut spending on a host of programs. Running off the fiscal cliff would slash the nation's trillion-dollar budget deficit nearly in half in just one year.
The impact would only come gradually, but economists expect it would be enough to knock the country into recession in the first half of the year.
So far, uncertainty over the talks appears to have had only a limited impact on the economy.
New orders for durable goods, items meant to last three years or more, rose a greater-than-expected 0.7 percent in November due to gains in machinery, fabricated metal products, and computer and electronic products. Those increases were offset by a decline in volatile aircraft orders.
The report also showed a rise in shipments, brightening the prospects for fourth-quarter economic growth.
Shipments of non-defense capital goods orders excluding aircraft, used to calculate equipment and software spending in the government's measures of gross domestic product, gained 1.8 percent, after rising by a softer 0.6 percent in October.

Read More..

IMF extends zero interest loans to poor nations

WASHINGTON (Reuters) - Poor countries with loans from the IMF can continue to pay no interest until the end of 2014, the Fund's board said on Friday, as their economies are still recovering from the global economic crisis.
The IMF's zero-interest loan program for low-income countries had been set to expire at the end of this year.
"The executive board decision to keep interest rates at zero ... is testament to the Fund's continued support for low-income countries since the global economic crisis hit in 2009," IMF Managing Director Christine Lagarde said in a statement.
The IMF decided in 2009 to allow countries eligible for its anti-poverty loan program to pay zero interest on loans in light of the financial crisis.
The Fund also set a target to raise $17 billion to lend to the poorest countries, which are threatened by the risk of euro-zone contagion and by a drop-off in foreign aid after the global recession.
IMF's Lagarde has pushed to meet that goal, seeking to ease concerns that the IMF and donor nations may turn a blind eye to the world's poor as they focus on containing the euro zone crisis.
In September, the IMF said it would distribute a $3.8 billion windfall from gold sales to its 188 member countries if they agreed to commit most of the money to the anti-poverty loan program.

Read More..

Top business story in '12: Sluggish global economy

This would be the year when the global economy finally regained its vigor. At least that's what many had hoped.
It didn't happen.
The three largest economies — the United States, China and Japan — struggled again in 2012. The 17 countries that use the euro endured a third painful year in their financial crisis and slid into recession. Emerging economies slowed.
President Barack Obama defied predictions by sailing to re-election. And his landmark health care plan surprisingly survived Supreme Court review. Obama's re-election triggered a face-off with Republicans over averting the "fiscal cliff" — the drastic spending cuts and tax increases that were set to kick in Jan. 1.
The tech world dueled over smartphones and tablets and saw Facebook's IPO sour as fast as it had sizzled. The housing market inched toward recovery. And Americans suffered both a catastrophic drought and a catastrophic superstorm.
Least surprisingly, perhaps, another gallery of rogues brought investigative scrutiny to Wall Street.
The achingly slow global economic recovery was chosen as the top business story of the year by business editors at The Associated Press. The U.S. presidential election came in second, followed by the Supreme Court's upholding Obama's health-care plan.
1. THE GLOBAL ECONOMY: Worldwide growth was slack again in 2012. The global economy grew just 3.3 percent, down from 3.8 percent in 2011 and 5.1 percent in 2010, the International Monetary Fund estimates. The U.S. economy, the world's largest, failed to gain traction. Five years after a recession seized the economy and more than three years after it ended, growth in the United States was only about 2 percent. Unemployment remained a high 7.7 percent.
Europe fared worse. Its financial crisis did stabilize, thanks in part to the European Central Bank's plan to buy government bonds to help countries manage their debts. But the euro alliance sank into recession. Europeans, in turn, held back China, the world's No. 2 economy, by cutting back on Chinese goods. China's economy grew at a 7.4 percent annual rate in the July-September quarter. Though a scorching pace for developed countries, that marked a 3½-year low for China. And at year's end, Japan's economy, the world's third-largest, was shrinking.
2. U.S. PRESIDENTIAL ELECTION: Obama vaulted to a re-election victory over Mitt Romney, who had staked his bid on the weakest U.S. economic rebound since the Great Depression and had pledged to slash taxes. Unemployment under Obama topped 8 percent for 43 straight months.
Yet he won despite the highest unemployment rate of any president seeking re-election since World War II. Voters assigned him higher marks on the economy as the year progressed, perhaps encouraged by job gains. As the fiscal cliff neared, Obama fought to raise taxes on the highest-earning Americans. He also demanded aid for the long-term unemployed and money for roads, bridges and other infrastructure. Economists raised hopes that if the fiscal cliff was averted, the gloom would lift in Obama's second term.
3. OBAMA HEALTH CARE PLAN UPHELD: The Supreme Court caught many by surprise when it backed Obama administration's health care reform in a 5-4 vote. The law requires Americans to buy insurance or pay a tax, while subsidizing the needy. Hospitals and health insurers will likely benefit from 30 million new customers. Medical device makers, though, will face a new sales tax. And some small businesses say the law will discourage hiring because it requires companies to provide health care once they employ more than 50.
4. THE FISCAL CLIFF: A dreaded package of tax increases and deep spending cuts to domestic and defense programs loomed over the economy in the year's final months. Negotiators struggled to forge a budget deal to avert those measures. If they failed, the tax increases and spending cuts would kick in Jan. 1. That threat was intended to be so chilling that it would force Congress and the White House to take the painful budgetary steps needed to avoid it. Economists warned that if the fiscal cliff measures remained in place for much of 2013, they would cause a recession.
5. FACEBOOK's IPO: Years of anticipation led to Facebook's initial public offering of stock — the hottest Internet IPO since Google's in 2004. Many of the billion or so users of the world's largest online social network craved a chance to buy in early. On the eve of its first trading day, Facebook's market value was $104 billion — more than Amazon.com's or McDonald's at the time. Yet the IPO bombed. Its debut was marred by technical glitches with the Nasdaq exchange, allegations that a revenue gap wasn't publicly disclosed and complaints that the IPO had been priced too high. Traders lost confidence fast. Within three months, Facebook's stock had shed more than half its IPO value.
6. HOUSING RECOVERY: After a six-year slump that sent more than 4 million homes into foreclosure and shrank home prices about one-third nationwide, the U.S. housing market began to recover in mid-year. Modest job gains and record-low mortgage rates fueled demand. And the supply of available homes sank. By June, prices began rising. And builders broke ground on the most homes in four years. Housing boosted economic growth this year for the first time since 2005.
7. THE RETURN OF BIG OIL: Domestic crude oil production achieved its biggest one-year gain since 1951, driven by output in North Dakota and Texas. The United States is on pace to pass Saudi Arabia as the world's top oil producer within two years. Credit goes to drilling improvements, like those that have fed a boom in domestic natural-gas production — horizontal drilling combined with hydraulic fracturing, or fracking. The new production helped cut natural gas prices to their lowest levels in more than a decade. Higher oil production helped reduce oil imports to 1992 levels and hand record profits to U.S. refiners. Gasoline prices declined in the last three months of the year. But for all of 2012, the average gallon was a record $3.63.
8. BANKS BEHAVING BADLY: It was a banner year for bank drama. JPMorgan Chase lost $6 billion in a complex series of trades. And one of its bankers in London grew famous for big bets and became known as the "London whale." Morgan Stanley was accused of botching Facebook's IPO. An ex-banker trashed Goldman Sachs for putting profits ahead of customers and for mocking clients as "muppets." Barclays and UBS were fined for their roles in manipulating a key global interest rate. And HSBC agreed to pay $1.9 billion to settle charges that it enabled money laundering by Mexican drug traffickers.
9. MOTHER NATURE: There wasn't enough rain in much of the nation. Then, suddenly there was much too much. The nation suffered its worst drought since the 1950s, covering 80 percent of U.S. farmland. Grain and food prices soared. Then a storm so destructive it was dubbed a "superstorm" walloped the Northeast. Sandy blasted coastal New Jersey and New York and put 8.5 million customers in 21 states in the dark. Sandy will likely end up as the second-costliest U.S. storm ever after Hurricane Katrina.
10. MOBILE-GADGET WARS: Competition in mobile technology intensified. Apple maintained its worldwide dominance. But the use of Google's Android software on competing smartphones and tablets spread faster than Apple's market share. Forty-four percent of U.S. adults own smartphones, up from about 35 percent a year ago. Tablet ownership doubled in 2012. Taking on Apple's iPad, Microsoft unleashed its Surface tablet and began selling Windows 8, a tablet-friendly operating system. Amazon and Barnes & Noble rushed out high-definition-screen tablets. Each priced its premium model less than the entry-level iPad. Apple struck back with the iPad Mini. Struggling to compete, once-formidable Nokia and BlackBerry-maker Research In Motion floundered.

Read More..

Russia clashes over energy with Belarus, Ukraine, EU

MINSK/MOSCOW (Reuters) - Russia plunged back into the disputes over energy with Ukraine and Belarus that have repeatedly disrupted oil and gas supplies to European Union countries, and it also termed EU energy policy as "uncivilized".
Russia on Friday denied remarks by Belarussian President Alexander Lukashenko that it had agreed to increase its crude oil supplies to Minsk, vital for the Belarus economy, and said that it still intended to cut them next year.
On Thursday, Russian President Vladimir Putin criticized Ukraine for failing to agree on a deal, in return for cheaper gas, under which it would lease its pipeline network to Moscow and the European Union.
Russia, the world's top energy producer, supplies over a quarter of Europe's gas and oil needs. Ukraine ships around two thirds of Europe's imports of Siberian gas through pipelines across its territory, while Belarus is mainly responsible for oil deliveries
Clashes over energy pricing and pipeline transit with Ukraine and Belarus have led over the past decade to cuts or halts in Russian oil and gas supplies to Central and Western Europe. These have most often happened over the New Year, when Russia failed to agree on energy supply terms with the two countries.
The European Union has accused the Kremlin of using its energy might as a political tool, while Moscow has argued it wants its neighbors to pay fair prices promptly for energy.
On Friday, Belarussian state news agency BelTA quoted Lukashenko as saying Russia had agreed to increase oil supplies next year to 23 million tonnes (460,000 barrels per day) from 21.5 million this year.
"We have really agreed on the supply ... We will get the oil without any issues," he said.
Moscow was quick to deny the report, insisting it was offering 18.5 million tonnes, an effective cut in supplies.
"As of today, an agreement on supplies to Belarus in 2013 has not been signed," Russia's Energy ministry said in a statement. "The Russian side's offer is supplying 18.5 million tonnes of oil. Supplies in the first quarter of 2013 will be based on the suggested volume."
Russian oil is crucial for the economy of Belarus and is supplied free of Russia's normally hefty export duties as Moscow seeks to keep the country within its political orbit.
Belarus has two large oil refineries that process Russian crude and export gasoline and diesel to the West.
The refining business earns vital hard currency, but Moscow has occasionally bridled over supply terms, part of a complex arrangement that also covers pipeline supplies of Russian oil and gas to Europe via Belarussian pipelines.
Belarus, which suffered from a balance-of-payments crisis in 2011, faces a foreign debt repayment crunch next year when about $3 billion of its liabilities fall due.
UNCIVILISED DECISION
The stand-off with Belarus comes as Moscow is struggling to reach a deal with Ukraine over gas deliveries. Ukraine's reluctance to strike a deal on its gas transit system led to the last-minute cancellation of a visit to Moscow by its President Viktor Yanukovich this week.
Although Moscow has regularly been at odds with both neighbors, it has never faced a situation of simultaneous cuts through both countries to Europe.
At the same time tensions between Moscow and the European Union have risen over economic, political and human rights issues.
Putin, in Brussels on Friday for a Russian-EU summit, said it was unacceptable that EU rules were applied retroactively. He was particularly referring to the Third Energy Package of EU legislation to create a single energy market and prevent those that dominate supply from also dominating distribution.
An EU antitrust case against Russia's gas export monopoly Gazprom as well as EU attempts to diversify its energy suppliers away from Russia and legislation to encourage competition have angered Moscow.
"Of course the EU has the right to take any decisions, but ... we are stunned by the fact that this decision is given retroactive force," Putin told reporters in Brussels.
"It is an absolutely uncivilized decision."
Russia presented the European Commission with new proposals on the legal status of its gas pipeline infrastructure to accommodate its export projects in Europe, Energy Minister Alexander Novak told reporters.
Russia has been seeking exemptions from EU regulation that would allow it to make full use of pipelines bringing gas to Europe by routes that skirt around Ukraine.

Read More..

Two killed as looters raid supermarkets in Argentina

BUENOS AIRES (Reuters) - Two people were killed in Argentina on Friday as looters broke into supermarkets in several cities, stirring memories of the country's devastating economic crisis 11 years ago.
Police fired teargas and rubber bullets to stop dozens of stone-throwing youths from looting a supermarket owned by French retailer Carrefour near the capital, a day after the unrest erupted in the Patagonian ski resort of Bariloche.
Government officials condemned the violence and sent 400 military police to the southern city, where raiders stormed a supermarket owned by the local unit of Wal-Mart and made off with flat-screen televisions and other goods.
The violence spread to the central city of Rosario, where two people were killed, and to the northern province of Chaco. About 250 people were arrested in total in four different provinces and police battled to avert fresh incidents in the urban sprawl that encircles Buenos Aires.
"When you see that they're taking flat-screens, you know it's not hunger," said Daniel Scioli, governor of Buenos Aires province and an ally of President Cristina Fernandez.
Fernandez often contrasts the country's current economic stability with the 2001/02 crisis that plunged millions of Argentines into poverty and unleashed a wave of looting for food in supermarkets.
She was re-elected by a landslide just over a year ago, but her approval ratings have since plunged due to sluggish economic growth, surging prices, and middle-class anger over currency controls and her combative style.
Fernandez's administration blamed the violence on opposition trade union leaders, who rallied in the capital this week to demand wage rises and lower taxes due to double-digit inflation.
"There are elements in Argentina that want to provoke havoc and violence and stain our holiday season with blood," national security secretary Sergio Berni said. "Argentina is not the same as it was in 2001."

Read More..

"Django Unchained" premiere canceled after Newtown shooting

LOS ANGELES (Reuters) - The premiere for Quentin Tarantino's latest film "Django Unchained," a violent spaghetti Western slave revenge tale, was canceled on Monday in the wake of the school shooting in Connecticut last week, the film's studio said.

"Our thoughts and prayers go out to the families of the tragedy in Newtown, CT and in this time of national mourning we have decided to forgo our scheduled event. However, we will be holding a private screening for the cast and crew and their friends and families," a spokesperson for The Weinstein Company said in a statement.

Tuesday's premiere in Los Angeles was scheduled to have a red carpet and party, but instead will be a private screening with no media coverage.

The film, which won five Golden Globe nominations last week, stars Jamie Foxx as a slave turned bounty hunter who wreaks revenge on slave plantation owners as he tries to rescue his wife.

It features Tarantino's trademark style of extensive graphic and bloody violence, along with dark humor, and is due to be released in U.S. movie theaters on Christmas Day.

A source at the privately held Weinstein Company told Reuters the cancellation was unrelated to the violence depicted in the movie.

Paramount Pictures canceled a weekend premiere for Tom Cruise's new movie "Jack Reacher" and New York's Lincoln Center Film Society postponed a Monday screening and talk with Cruise out of respect for the Newtown families.

A total of 27 people, 20 of them young children, died in Friday's shooting rampage in Newtown, Connecticut by a lone gunman, who then killed himself.

Read More..

"Hebrew Hammer" sequel profits from crowdfunding campaign

LOS ANGELES (TheWrap.com) - "The Hebrew Hammer vs. Hitler," the sequel to 2003's "The Hebrew Hammer," will begin filming next year, after an innovative crowdfunding campaign that's raised $35,000 on Jewcer.com, the filmmakers announced Tuesday.

Adam Goldberg will return in the lead role, with principle photography expected to begin in May 2013.

In the film, Goldberg's character, now married and enjoying the good life in suburbia, is forced to dust off his black-leather couture to confront a new menace: a time-traveling Hitler intent on altering key moments in Jewish history.

The original film launched at Sundance and had a limited theatrical release before being picked up by Comedy Central in a five-year deal.

"It's been amazing," filmmaker Jonathan Kesselman, writer and director of both movies, said in a statement. "The fans are making this happen. The cult status of the first movie attracted millions of fans around the world, making crowd-funding a viable option. Funding is now in the hands of fans who can help make the movies they want to see."

Kesselman negotiated for the rights to the sequel with John Schmidt at ContentFilm, ending a near decade-long tussle and several attempts at getting it made.

Read More..

Joe Roth, Universal Reunite for "Daughter of Smoke & Bone"

NEW YORK (TheWrap.com) - Joe Roth will produce Universal's "Daughter of Smoke & Bone," a potential young-adult franchise for the studio, it announced on Tuesday.

Laini Taylor's fantasy novel, the first in a planned trilogy, follows a 17-year old art student in Prague who is raised by chimera, a type of otherworldly creature. Universal acquired the rights in December of 2011.

It was one of Amazon.com's Top Ten Books of 2011 and one of Publishers Weekly's Best Books of 2011. The sequel to it, "Days of Blood & Starlight," is a New York Times bestseller and was named a Best Book of 2012 by Amazon.com.

The project is currently in development, still in need of a scribe to adapt the book. Roth will produce and Palak Patel, president of Roth Films, will executive produce.

"Laini Taylor masterfully tells a story of identity and destiny that welcomes readers into a fantastical world with a unique mythology," Roth said in a statement. "It is very different than anything we've seen before and I look forward to bringing the fascinating characters to the big screen."

Roth and Universal last partnered on "Snow White and the Huntsman," a revisionist take on the fairy tale starring Kristen Stewart as the eponymous leading lady. That film grossed just shy of $400 million at the global box office, enough to warrant a sequel that Roth is also producing.

The former head of both Fox and Disney, Roth is at work on a number of high-profile films, from the sequel to "Alice in Wonderland" to Sam Raimi's "Oz: The Great and Powerful."

Like "Snow White," this new project revolves around a female protagonist set apart from society by both circumstance and behavior. Karou, the protagonist, must collect teeth for Brimstone, the exacting chimera that raises her.

As Karou goes on missions for Brimstone, she encounters all sorts of magic and creatures unknown to her fellow classmates. She also meets Akiva, a seraph whom she falls in love with.

Maradith Frenkel, Universal's VP of production, is overseeing the project with creative executive Sara Scott.

Read More..

"Bully" honored with "Stanley Kramer Award" from PGA

LOS ANGELES (TheWrap.com) - The Producers Guild of America will honor the documentary "Bully" with the 2013 Stanley Kramer Award at its January awards ceremony, the organization said Tuesday.

Director Lee Hirsch and producer Cynthia Lowen will accept the award. "Bully" follows five high school students as they are subjected to taunts and ridicule and examines the impact their mistreatment has on their lives and their families.

"'Bully' is a powerful and inspiring film that brought much-needed attention to an issue that just about everyone can relate to at one point or another in their life," said 2013 PGA Awards Chair Michael De Luca in a statement.

Released last spring, the film became embroiled in a heated battle with the Motion Picture Association of America's ratings board after receiving an R-rating for language. After its distributor, the Weinstein Company, initially threatened to release the film unrated, it ultimately agreed to tone down some language in order to receive a PG-13 rating.

The award was established in 2002 and is named for producer and director Stanley Kramer, who was the driving force between a number of movies such as "Guess Who's Coming to Dinner" and "On the Beach" that took on social and political issues such as racism and nuclear war.

Previous recipients of the Stanley Kramer Award include such films as "Hotel Rwanda," "Precious," "An Inconvenient Truth" and "In America."

Read More..

Bron Studios finds "Sole Mates"

LOS ANGELES (TheWrap.com) - Bron Studios is moving forward with its first CG animated feature film, "Sole Mates," the company announced on Tuesday.

The film, an "animated journey of love, lost and found, with comedic charm and universal themes set in a familiar world from a new point of view," is due to go into production in 2013, based on an original concept by Deon Taylor ("Chain Letter").

Bron managing director, Aaron L. Gilbert will produce, alongside Taylor and Ahmet Zappa ("The Odd Life of Timothy Green").

Taylor has written, directed, and produced a number of other projects, including "The Hustle" (Charlie Murphy) and the drama "Supremacy" with Danny Glover. He is represented by WME.

Read More..