“I am always doing that which I cannot do, in order that I may learn how to do it” — Pablo Picasso

1. US tax breaks worth $150bn face axe — per ft, the Obama Administration has reportedly proposed axing $150B of tax breaks over ten years as part of negotiations to avert the fiscal cliff. These include $28B for fossil fuel companies, $77B connected to inventory valuation, and $13B in low capital-gains rates for P-E funds, VC firms, and real-estate transactions.
2. Moody Downgrades France Credit Rating — Moody downgraded France from Aaa to Aa1 with a negative outlook.
3. Key ETF Performance — via Bespoke, below is an updated look at recent performance numbers for key ETFs across all asset classes. Quarter-to-date numbers, stocks in the US remain down. The S&P 500 tracking SPY ETF is down 3.36% in the fourth quarter, while DIA and QQQ are down even more.

4. Eurozone finmins delay Greek aid once more — Eurozone finance ministers have again postponed approving the next tranche of Greece’s bailout after failing to reach an agreement on how to make the country’s debt more sustainable.
5. Superstorm Sandy Seen Boosting U.S. With as Much as $240 Billion Rebuilding — per Bloomberg, Reconstruction and related purchases and hiring may range from $140 billion to $240 billion and increase U.S. economic growth by 0.5 percentage point next year, assuming $50 billion in losses, according to Economic Outlook Group LLC, a Princeton, New Jersey-based forecasting firm.
6. The S&P500 and Fed Intervention — below is a chart depicting the S&P500 performance as a result of the Quanlitative Easing (QE).

The week ahead — Economic data from Econoday.com:

“Darn the wheel of the world! Why must it continually turn over? Where is the reverse gear?” — Jack London

1. Greece raised 4 bln euros ahead of debt rollover — per MarketWatch, Greece appeared on track to redeem 5 billion euros ($6.3 billion) in treasury bills that are due, after selling 4.06 billion euros of one- and three-month bills at auction.
2. China Picks New Economic Chiefs, Zhou Seen Leaving PBOC — according to Bloomberg, China began installing a new economic leadership by indicating that central bank Governor Zhou Xiaochuan will step aside and Vice Premier Wang Qishan, the top finance official, will move to a new role.
3. Facebook braces for biggest lockup wave — Facebook (FB) shares are set to emerge from a post-initial public offering lockup last Wednesday, making them available for sale in the open market and potentially doubling the size of the company’s share float — about 800 million of the company’s shares held by insiders become eligible for sale.
4. Anti-austerity strikes sweep Europe — millions of workers in Europe are on strike to protest austerity as part of a “European Day of Action and Solidarity.” Spanish and Portuguese unions are carrying out their first coordinated general strike, while organizations in Greece, Italy, France and Belgium planned stoppages or demonstrations.
5. China Unveiled New Leaders — as expected, China unveiled the makeup of its top Communist Party leadership, elevating Vice President Xi Jinping to replace Hu Jintao. Vice Premier Li Keqiang was named the party’s No. 2, putting him on the path to take over as premier in March.
6. Euro zone slips into second recession since 2009 — Economic output in the 17-country euro zone fell 0.1 percent in the third quarter, the EU’s statistics office Eurostat said on Thursday, following a 0.2-percent drop in the second quarter.
Those two quarters of contraction put the euro zone’s 9.4 trillion euro ($12 trillion) economy officially in recession, although Italy and Spain have been contracting for a year already and Greece is suffering an outright depression.
7. Japan Election May Curtail Stimulus as Recession Looms — Japanese PM Yoshihiko Noda has called an election for December 16 after the upper house approved a bill to issue bonds that will fund government spending for the rest of the fiscal year and stop it from running out of money. Noda’s DPJ party is expected to lose to the opposition LDP, which favors uber-easing to help Japan get out of its deflationary black hole.
8. AAII latest sentiment readings – In prior bull market when the bullish sentiment dropped below 25%, the market rally over the next 3-month and 6-month;

The week ahead — Economic data from Econoday.com:

“The four most expensive words in the English language, “This time it’s different”” — Sir John Templeton.

1. Germany Economy Heading for Contraction — the euro zone relies heavily on Germany, its largest economy, to generate growth. Germany’s composite PMI fell to 47.7 in October from 49.2 in September, which, says Markit, “raises the likelihood of an outright GDP contraction during the final quarter of the year.”
2. Obama Wins Second-Term – faces fresh challenge with ‘fiscal cliff’ — Barack Obama won re-election, but the U.S. president faces a fresh challenge confronting the “fiscal cliff,” a mix of tax increases and spending cuts due to extract some $600 billion from the economy barring a deal with Congress.
At stake are two separate issues – individual tax cuts due to expire at year’s end and tens of billions of dollars in across-the-board federal spending cuts due to kick in the day after New Year’s Day.
3. Greeks Government Approved Austerity Vote — thousands of Greeks held a second day of a general strike to protest the latest round of austerity, which the country’s parliament passed. The approval of the €13.5B of wage cuts and tax hikes by 2016 is vital for Greece to receive the latest €31B tranche of its bailout before it runs out of money.
4. President Election Cycle Update — below is the updated chart (courtesy of the Bespoke Inv’t Group) which highlights the similarities between this year and prior Presidential Election years numerous times.

5. China begins congress to change leadership — outgoing Chinese President Hu Jintao has set his successor, who’s expected to be Vice President Xi Jinping, a target of doubling per-capita income by 2020.
6. Japan Data Show Signs Of Distress — per WSJ, Japan swung to its first current account deficit since 1981 in September, with the gap coming in at an adjusted ¥142B ($1.8B). The shortfall is a sign Japan is nearing the point at which it won’t be able to finance its mammoth debt from domestic sources only.

The week ahead — Economic data from Econoday.com:

Due to Hurricane Sanday and power outages, Weekly Recap of Nov 1, 2012 will not be posted.

Thank you for your patience.

“The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function.” —F. Scott Fitzgerald

1. GE Refinances to Counteract ‘fiscal cliff’ fears — according to FT, General Electric (GE) has refinanced $5B worth of bonds that mature in February just in case Barack Obama or Mitt Romney are unable to avert the fiscal cliff. “If it’s choppy, we are prepared,” CFO Keith Sherin said.
2. Home values rise most since 2006 — the Zillow Home Value Index rose 1.3% on quarter to $153,800 in Q3, representing the biggest rise since Q1 2006, although the recovery is uneven across America due to differences in foreclosure conditions and employment.
3. Companies Are Sitting on More Cash Than Ever Before — amid a lackluster earning season that has featured many companies missing sales expectations, cash balances have swelled 14 percent and are on track toward $1.5 trillion for the Standard & Poor’s 500, according to JPMorgan. Both levels would be historic highs.

The week ahead — Economic data from Econoday.com: