Canada: TSX Composite retreat

The TSX Composite retreat below 12200 on the daily chart indicates another test of medium-term support at 12000. The rally remains intact as long as support holds. Failure would re-test primary support at 11750/11800, while recovery above 12200 would test resistance at 12500. Rising 63-day Twiggs Momentum suggests a primary up-trend. Breakout would signal an advance to 13250*.

TSX Composite Index

* Target calculation: 12500 + ( 12500 – 11750 ) = 13250

Falling momentum on US indices

The S&P 500 weekly chart continues to warn of a primary down-trend, with bearish divergence on 63-day Twiggs Momentum. Reversal of TMO below zero would strengthen the signal. Hardening of positions in fiscal cliff negotiations makes another test of primary support at 1350 seem inevitable. Breakout above 1425 would test resistance at 1475, but declining momentum suggests advance above 1475 is unlikely.

S&P 500 Index

Dow Jones Industrial Average also indicates falling momentum, with breach of the rising trendline. Respect of resistance at 13300 would re-test primary support at 12500. Reversal of 13-week Twiggs Money Flow below zero would indicate rising selling pressure.

Dow Jones Industrial Average

‘Doomsday’ For The Fiscal Cliff? | ABC News

Republicans are considering a “Doomsday Plan” if fiscal cliff talks fail. The ABC’s Jon Karl reports:

It’s quite simple: House Republicans would allow a vote on extending the Bush middle class tax cuts (the bill passed in August by the Senate) and offer the president nothing more – no extension of the debt ceiling, nothing on unemployment, nothing on closing loopholes. Congress would recess for the holidays and the president would face a big battle early in the year over the debt ceiling.

Two senior Republican elected officials say this Doomsday Plan is becoming the most likely scenario. A top GOP House leadership aide confirms the plan is under consideration, but says Speaker Boehner has made no decision on whether to pursue it.

Under one variation of the plan, House Republicans would allow a vote on extending only the middle class tax cuts and Republicans, to express disapproval at the failure to extend all tax cuts, would vote “present” on the bill, allowing it to pass entirely on Democratic votes.

By doing this, Republicans avoid taking blame for tax increases on 98 percent of income tax payers. As one senior Republican in Congress told me, “You don’t take a hostage you aren’t willing to shoot.”

This is a time for mending bridges damaged during the election. The ability of the President to unify rather than polarize the two sides of the house will be tested in the next few weeks. Let us hope that he measures up.

via ‘Doomsday’ For The Fiscal Cliff? (The Note) – ABC News.

Obama Theatrics, Obama Reality – Business Insider

Wendy McElroy writes that we should ignore the distraction of President Obama’s flowery speeches and focus on the under-the-radar actions of regulatory agencies and regulatory czars appointed — FDR-style — directly by the president.

A Nov. 19 article in the National Review opened, “On Friday, the Environmental Protection Agency rejected petitions from the governors of Georgia, Texas, Arkansas, Delaware, Maryland, New Mexico, and North Carolina to suspend the biofuel-blending requirements established by the federal Renewable Fuel Standard (RFS) program.”

The petition asked for relief from the program’s requirement to convert corn crops into ethanol. National Review explained, “The 2012 target is to blend 13.2 billion gallons of biofuel into our gasoline, a quantity that ratchets up to 13.8 billion gallons in 2013. This year, about 4.7 billion bushels, or 40% of the nation’s corn crop, will be consumed by ethanol manufacturing.” The petitioning states are economically reeling from “the worst drought in 50 years,” and the EPA czar has the power to waive the program’s requirement. She chose not to.

via Obama Theatrics, Obama Reality – Business Insider.

Fiscal Cliff Is Just a Speed Bump on the Road to a Real Crisis | International Liberty

Dan Mitchell writes in the New York Post:

A lot of people get upset about the national debt, which is somewhere between $11 trillion and $16 trillion, depending on whether you include money the government owes itself. Those are big numbers — but if you add up the amount of money that the government is promising to spend for entitlement programs in the future and compare that figure to the amount of revenue that the government projects it will collect for those programs, the cumulative shortfall is more than $100 trillion. And that’s after adjusting for inflation. Some politicians claim this huge, baked-into-the-cake expansion of government isn’t a problem, because we can raise taxes. But that’s exactly what Europe’s welfare states tried — and it didn’t work. Simply stated, even huge tax hikes won’t stem the flow of red ink in the long run if government keeps growing faster than the private economy. This is the fiscal problem that demands attention. Absent real entitlement reform, such as block-granting Medicaid to the states, the burden of government spending will consume ever-larger shares of our economic output with each passing year.

via Explaining in the New York Post that the Fiscal Cliff Is Just a Speed Bump on the Road to a Real Crisis « International Liberty.

Even without U.S. cliff, world economy teeters | Reuters

Pedro Nicolaci da Costa at Reuters writes:

In the United States, the economy faces growing challenges even without the ongoing political wrangling…….

The coming week brings a slew of reports expected to show the U.S. economy struggling. Data on Friday will likely show employment growth slowed to just 100,000 jobs last month from 171,000 in October, according to a Reuters poll of economists.

U.S. manufacturing data this week is also likely to suggest a fourth-quarter slowdown is at hand.

via Even without U.S. cliff, world economy teeters | Reuters.

Why is Australia paying Japanese prices for natural gas?

Australian-born chairman and CEO of the Dow Chemical Company, Andrew Liveris, talks with Alan Kohler on ABC Inside Business about the US fiscal cliff and why Australia needs a cohesive energy policy.

“We have to create an infrastructure such that we can have gas-on-gas on competition domestically. If you build the infrastructure, and private sector can do it, and allow shared pipelines, if you build it you will get a domestic gas system and a pricing system that defies the oil gas parity pricing that countries like Australia should never have. If you have the resource in your country, you shouldn’t be paying the highest alternative price of the country that doesn’t have the resource. Why are we paying Japan energy prices when we have domestic gases?”

Euro recovers

The Euro is testing its long-term descending trendline in response to the weakening dollar. Breakout above $1.315/$1.32 would confirm the primary up-trend signaled earlier by 63-day Twiggs Momentum recovery above zero.

Euro/USD

* Target calculation: 1.315 + ( 1.315 – 1.265 ) = 1.365

The Numbers Racket at Steven Landsburg | The Big Questions

Steve Landsberg points out the flaw in the often-quoted statistic that the median US worker has enjoyed hardly any income gain over the past few decades, with median wages growing from $25,000 in 1980 to $25,700 in 2005:

Each demographic group has progressed, but at the same time, there’s been a great influx of lower income groups — women and nonwhites — into the workforce. This creates the illusion that nobody’s progressing when in fact everybody’s progressing.

Actual growth rates are as high as 75% for white women and 62% for nonwhite women.

via The Numbers Racket at Steven Landsburg | The Big Questions: Tackling the Problems of Philosophy with Ideas from Mathematics, Economics, and Physics.