These are stories Report on Business is following Monday, Nov. 19, 2012.
Global markets are rallying so far this morning, buoyed by an optimistic tone on fiscal talks in the United States.
But troubles in Europe loom larger than America's so-called fiscal cliff at this point, with finance ministers set to meet again tomorrow to talk about Greece. Again.
President Barack Obama and congressional leaders all sounded the right note after meeting Friday to discuss avoiding the fiscal cliff, which refers to tax hikes and spending cuts that would automatically take effect Jan. 1 if no budget deal is reached.
The president backed this up on the weekend, telling reporters during a trip to Bangkok that he's confident a deal will get done.
That has put some juice into global markets.
"With all the negativity in the markets last week the bears had been out in force, but on Monday morning they seem to have gone into hibernation," said market Alastair McCaig of IG in London.
"Traders have a considerably more bullish outlook to life, buoyed by encouraging noises made by U.S. politicians over the weekend, which has increased the belief that they will be able to resolve fiscal cliff issue before deadlines are reached."
Tokyo's Nikkei gained 1.4 per cent, and Hong Kong's Hang Seng 0.5 per cent.
In Europe, London's FTSE 100, Germany's DAX and the Paris CAC 40 were up by between 1.5 per cent and 2 per cent by about 9 a.m. ET.
Dow Jones industrial average and S&P 500 futures were also up.
That's this morning. Tomorrow could look a lot different, depending on talks among Europe's finance ministers.
Last week, at a meeting in Brussels, they agreed to give Athens an extra two years to meet its fiscal targets, though put off a decision on the next tranche of bailout money. That's now scheduled to be decided tomorrow, and fresh in everyone's minds will be the public split last week between Luxembourg's Jean-Claude Juncker, the head of the finance ministers' group, and International Monetary Fund chief Christine Lagarde, who opposed the extension.
"The governments and the IMF will sit down again this week to try to put together a package, with the IMF balking at the latest euroland proposals because it views them as unsustainable," said chief economist Carl Weinberg of High Frequency Economics.
"So do we. Even if Greece's woes are contained this week, Spain continues to face a cloud of doubt over its ability to avoid [a bailout package that would break the rescue fund]," he said in a research note.
"The fate of Italy's government – and fiscal stability initiatives – is also in doubt. Risks are rising for year-end here."
As well, for now the optimistic words from President Obama are just that.
"While the early signs of progress are encouraging there remains a long way to go in what will be a holiday shortened week for the U.S. ahead of Thanksgiving and the busiest shopping day of the year the day afterwards, Black Friday," said senior analyst Michael Hewson of CMC Markets in Europe.
There are also warnings today on just how it all ends. As it now stands, running over the cliff is seen to hit the economy to the tune of more than $600-billion (U.S.).
Derek Holt of Bank of Nova Scotia said he believes a deal will be reached, but it won't be anything that's "kind to the economy or markets," and thus today's optimism is misplaced.
"I still think an agreement will be reached that avoids the most extreme aspects of the fiscal cliff, but not until the last minute following many theatrics over coming weeks that have yet to play out," he said.
"An agreement that heads off the worst elements of the fiscal cliff by avoiding draconian sequestration cuts focused upon the defence lobby group is likely and that should rein in the over 4-per-cent hit to GDP that would have otherwise occurred," he added in a research note.
"That still means, however, that U.S. taxes will rise through what is a likely end to the payroll tax cut that will lead to a retrenchment in Q1 personal disposable income, and a rise in at least some personal tax rates. Those twin policy changes could well, in turn, likely lead to a retrenchment in consumer spending that will be bearish for company earnings reports, in my opinion."
- Follow our Inside the Market Blog
- U.S. takes a step back from the fiscal cliff
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BCE, Astral strike new deal
BCE Inc. and Astral Media Inc. have gone back to Canada's broadcast regulator with a new takeover deal they hope will win approval this time, The Globe and Mail's Steve Ladurantaye reports.
"We heard Canadians and the CRTC loud and clear - they want assurance that Astral joining with Bell Media will directly benefit consumers and creators," said BCE chief George Cope.
"We're ready to deliver more choice for listeners and viewers, more opportunity for content creators, and more competition for the broadcasting industry. Bell and Astral are happy to move forward with a new proposal that benefits all Canadians, in both official languages, in communities large and small across the nation, with new ideas, new funding and new choices."
BCE disclosed few details of the new agreement in a statement, though added it has withdrawn its request to the federal cabinet to direct the Canadian Radio-television and Telecommunications to support its proposed $3-billion takeover of Astral, which it rejected last time around.
"The new proposal to the CRTC by Astral and Bell addresses the commission's concerns and sets out the steps the companies would take to comply with the relevant viewership thresholds," the companies said.
"The proposal also includes a revised package of tangible benefits to support the creation of exceptional Canadian TV and radio content, promote homegrown talent in a multi-platform universe, and foster consumer engagement in the broadcasting system."