Futures sharply higher on fiscal cliff deal
Stocks set to soar at the open on the 11th hour budget agreement.
In other news, Zipcar (ZIP) was acquired by Avis (CAR) for $12.50 per share. Zipcar closed on Monday at $8.24.
European stocks traded strongly higher almost across the board, as the resolution of the fiscal cliff in the U.S. outweighed mixed data in the European PMI readings. In the U.K., the FTSE 100 traded up well over two%, boosted by a stronger than expected PMI. France's CAC 40 Index was higher by 2.40%, while Germany's DAX traded up over 2.20%. Italy's FTSE MIB Index rose over 3.20%.
- Spanish PMI came in at 44.6, less than the 45.1 than anticipated.
- Italian PMI beat expectations at 46.7, more than the 45.40 that was expected.
- French PMI came in line with expectations at 44.6
- German PMI missed expectations at 46, economists were looking for 46.3.
- U.K. PMI came in at 51.4, more than the 49.2 that was expected and solidly above the 50 mark that indicates economic expansion.
Markets in Japan and China remain closed for the holiday, but Asian markets that were open traded up strongly higher. The Korea KOSPI Index was up over 1.70%, while Australia's S&P/ASX 200 traded up over 1.20%. Macau casino revenue is up 13.5% to a record $38 billion in 2012.
Commodities were mostly higher, in line with stocks, with the exception of natural gas. WTI crude traded up over 1.25% as Brent crude rose over 0.70%. Natural gas dropped by over 1.30%. Gold traded up over 0.40%, as did silver.
The U.S. dollar was mostly weaker early Wednesday. The greenback dropped against the euro, as the EUR/USD rose to near 1.325. Meanwhile, the GBP/USD also rallied to around 1.63 and the USD/CHF fell to 0.9123. The dollar did show some strength, against Japan's yen, with the pair trading up slightly to 87.11, continuing the recent trend. The AUD/USD traded up almost 0.90% to 1.0487, and the USD/CAD dropped to 0.9848.
Stocks moving in the premarket included:
On the economics calendar Wednesday, there are a fair number of reports. At 8:00 a.m. ET markets will see data on German inflation. Later, at 9:00, the U.S. manufacturing PMI will be released. Construction spending will follow at 10:00 am along with ISM Manufacturing.
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So without further ado, here are eight corporate subsidies in the fiscal cliff bill that you haven’t heard of.
1) Help out NASCAR - Sec 312 extends the “seven year recovery period for motorsports entertainment complex property”, which is to say it allows anyone who builds a racetrack and associated facilities to get tax breaks on it. This one was projected to cost $43 million over two years.
2) A hundred million or so for Railroads - Sec. 306 provides tax credits to certain railroads for maintaining their tracks. It’s unclear why private businesses should be compensated for their costs of doing business. This is worth roughly $.
3) Disney’s Gotta Eat - Sec. 317 is “Extension of special expensing rules for certain film and television productions”. It’s a relatively straightforward subsidy to , and according to the Joint Tax Committee, was projected to cost $150m for 2010 and 2011.
4) Help a brother mining company out – Sec. 307 and Sec. 316 offer tax incentives for miners to safety equipment and train their employees on mine safety. Taxpayers shouldn’t have to bribe mining companies to not kill their workers.
5) Subsidies for Goldman Sachs Headquarters – Sec. 328 extends “tax exempt financing for York Liberty Zone,” which was a program to provide post-9/11 recovery . Rather than going to small businesses affected, however, this was, , “little more than a subsidy for fancy Manhattan apartments and office towers for Goldman Sachs and Bank of America Corp.” Michael Bloomberg himself actually thought the program was excessive, so that’s saying something. According to David Cay Johnston’s The Fine Print, Goldman got $1.6 billion in tax free financing for its new massive headquarters through Liberty Bonds.
6) $9B Off-shore financing loophole for banks – Sec. 322 is an “Extension of the Active Financing Exception to Subpart F.” Very few tax loopholes have a trade association, but this one does. This strangely worded provision basically allows American corporations such as banks and manufactures to engage in certain lending practices and not pay taxes on income earned from it. According to , supporters of the bill include GE, Caterpillar, and JP Morgan. Steve Elmendorf, super-lobbyist, has been paid $80,000 in 2012 alone to lobby on the
7) Tax credits for foreign subsidiaries – Sec. 323 is an extension of the “Look-through treatment of payments between related CFCs under foreign personal holding company income rules.” This gibberish sounding provision cost $1.5 billion from 2010 and 2011, and the US Chamber loves it. It’s a provision that allows US multinationals to not pay taxes on income earned by companies they own abroad.
8) Bonus Depreciation, R&D Tax Credit – These are well-known corporate boondoggles. The research tax credit was projected to cost $8B for 2010 and 2011, and the depreciation provisions were projected to cost about $110B for those two years, with some of that made up in later years.
Conveniently, the Joint Committee on Taxation in 2010 did an analysis of what many of these extenders cost. You can find that report .
Read more at
What do you think of the Repubs now? How much longer are you going to keep holding your collective noses and voting for this bunch of inept, incompetent, power-grabbing, big gov progressives, just because they have an "R" next to their name? They love to talk about how conservative they are, but when it comes right down to it, their true colors show through. The bill they just passed, with tax increases and more spending, is the polar opposite of basic conservative principles. Are you going to look the other way and give them a pass, yet again?
Please, remember this moment and vote accordingly the very next chance you get. The evidence is overwhelming - the future of the conservative movement does NOT lie with the Repub party. The sooner you figure that out, the sooner we can move forward.
The democrats wont ever stop their tax and spend policies because that is how they get elected. Their main goal is to find ways the government can help struggling and dependent individuals. To right the wrongs of big business and to promote fairness. They believe in a land of equal outcome rather then a land of equal opportunity. In general, if a businesses costs exceed its revenues like our government they don't go to their best customers and ask for more money as a first choice to solve the problem. If they do they would stand a good chance of even lower revenues and reduced sales. This is the current administrations policies. If the business decided to reduce the costs of their products or services through leaning up operations/reducing spending then they may actually increase sales and improve revenues. This would also set the plate for them to be able to expand and provide for future stability. That is the republican approach. Let me ask you, what approach would you use if it were your business. Don't believe the Bill Clinton garbage, he benefited from the Y2K fiasco and all but created the financial crisis by deregulating the banks.
Goldman Sachs and the big banks, Hollywood, NASCAR etc. are all "dancing in the street" over this recently signed deal and why not...they all directly benefit and it is no surprise they all have direct ties to the White House. Gee you think this is a coincidence??
Now Mirage some of that is funny, but at least you are not giving up.
How about those Markets this week ?? So far..
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The idea of US crude being a shelter from turmoil abroad may not be as far fetched as it seems.
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