04 Jan
2016
Encryption, Policy Retreat, and More – TenCount
- It’s the first business day of 2016, and the state of the world is, well, uncertain. Saudi Arabia cut diplomatic ties with Iran after Iranians stormed the Saudi embassy in Tehran, which followed the Saudis’ execution of a prominent Shiite cleric. World financial markets tumbled on the first trading day of the year in reaction to the Saudi-Iran crisis and to signs of economic weakness in China. And an armed antigovernment uprising continued in Oregon.
- The House of Representatives returns to work on Tuesday with Speaker Paul Ryan promising to restore the ability of individual House members to influence and act on proposed legislation. First up, though, is more of the same: votes to repeal Obamacare and to deny funding to Planned Parenthood. The White House has vowed to veto both measures, and Congress doesn’t have to votes to override the veto.
- Next week, the Senate returns and the House is off to its annual policy retreat to draw up priorities for the year. A big one for Speaker Ryan is an overhaul of the tax code, which he has said he aims to accomplish by consolidating tax brackets, lowering rates and taking aim at some popular deductions. Or as Ryan himself said recently, “Close all those loopholes and use that money to cut tax rates for everybody. Take the seven tax rates we have now and collapse them to two or three.”
- One prime target for congressional action on taxes is corporate inversions, those strange transactions where a United States company buys a foreign competitor and moves the headquarters for the combined company to the target’s home country. The aim, of course, is to eliminate U.S. taxes on income earned outside the United States, which is otherwise subject to the corporate rate of about 34 percent.
- Want to know what Federal Reserve governors say behind closed doors? The public will get some idea on Wednesday when the Fed releases the minutes of the December policy meeting of the Federal Open Market Committee, which last month raised interest rates for the first time in nine years. Traders will also be interested to hear what Fed governors say before open doors, tuning in Thursday and Friday to speeches by the presidents of the Fed’s Richmond, Chicago and San Francisco banks.
- Encryption continues to be the subject of heated debate among lawmakers, with Apple getting most of the blame for a stalemate between those who believe the government should be able to access private communications for the purpose of keeping the nation safe and those who say that law enforcement needs to get a search warrant. Apple claims that it couldn’t decrypt users’ messages even if it wanted to do so without customer permission.
- If we’ve learned anything from the Star Wars saga, it is that trade federations are the building blocks of a galactic economy. Trade is on the agenda here on Earth as well for 2016, and Congress is likely to take up this year a pending approval of the Trans-Pacific Partnership, while the Transatlantic Trade and Investment Partnership, a proposed agreement between the United States and the European Union, is expected to be debated and finalized later this year.
- The unemployment rate is expected to hold at a seven-year low of 5 percent when new employment figures are reported on Friday. Analysts expect that United States employers added about 200,000 jobs in December. If so, that would put the total for 2015 at about 2.5 million new jobs, versus 3.1 million in 2014.
- If it’s the first of the month, bills must be due, and they are big-time in Puerto Rico and Brazil. Puerto Rico has until late Monday to decide whether it will default on some $37 million in bond interest payments, a tip of the iceberg compared with the $70 billion of debt it has outstanding. Meanwhile, further south, Brazil has about $38 billion of local and foreign bonds due this week, putting it on the verge of a debt downgrade.
- What says Happy New Year better than a calendar featuring 12 months of Vladimir Putin, including the requisite picture of him enjoying a leisure activity shirtless? Nothing really. They are selling like blini, so get a glimpse here.