Business

Morning Market Roundup: Payroll Tax Deal; Should Unions Fear American Airlines?

Here’s what’s important in the financial world this morning:

U.S. Markets: Markets rallied into the Christmas weekend. Perhaps the major U.S. indices will be up for the year. Little is likely to happen between now and the new year to dampen the mood. The eurozone sovereign problem is at rest while the International Monetary Fund and financial ministers in the region set their plans for 2012. The American Congress will pass legislation to sustain tax cuts and long-term unemployment payments (for a whole two months!). Every single measure of U.S. holiday sales shows consumer activity up.

Christmas for American Airlines: AMR, the parent of American Airlines, has taken advantage of the peculiar advantages of Chapter 11. A judge approved its plans to buy 32 Boeing jets between now and the end of the year. It also looks like the airline company will get to cancel some leases on older planes. American would have been unable to effect those cancellations under normal circumstances. Labor and airplane lease companies have a great deal to fear from the Chapter 11 process. The bankruptcy court could decide that union pacts hobble the airline too much to make it viable. A judge also could decide that American must close down a number of routes. The Boeing decision is an early sign that American will come out of Chapter 11 a much stronger firm.

New Kodak President: Eastman Kodak continues its efforts to find a way to prevent Chapter 11. The company promoted its general counsel to president. Laura Quatela has been instrumental in setting licenses for the firm’s intellectual property to Samsung and LG Electronics. But Kodak has failed to license any of its large digital portfolio, which means that Quatela’s success has been limited.

Some analysts are shocked that CEO Antonio Perez has kept his job. There is the possibility that if Kodak does file for bankruptcy, Quatela would be the best steward of the company’s assets, so her move to the top job may not be far away.

Payroll Tax Cuts: Congress will pass legislation to extend jobless benefits and payroll tax cuts for another two months. House Republicans had resisted this, but pressure was brought to bear on their leadership by rank and file representatives who had heard complaints from voters about the difficult financial situation of many Americans. Of course, the short-lived nature of the program extensions means the debate will begin again when Congress returns from the holidays. That fact is more important than the passage of the bill. The jobless and people who need the few dollars per month that payroll tax cuts give them may find themselves in worse conditions in March rather than now. That will keep many consumers conservative, at least until they know the fate of the two programs for the balance of the year.

(24/7 Wall St./ The Blaze)

Comments (15)

  • joe alexich
    Posted on December 23, 2011 at 5:51pm

    We must elect more Conservatives to the Senate,the unions got Harry Reid and the other far left bums in ,blame them that’s there job to hold on to power and your money.Endless credit for the Dem’s, will buy more votes.You decide socialism or Capitalism in this next election.

    Report Post »  
  • Ironeagle
    Posted on December 23, 2011 at 1:07pm

    And the market goes rolling along…

    Report Post » Ironeagle  
  • Goodgriefgeezlouise
    Posted on December 23, 2011 at 11:24am

    Like to just add..Union employees aren’t any worse as a whole then other employees in my view..and I’ve seen many good and bad on both sides..The problem lies entirely in my opinion, with the representation…Union representation has become political..and not serving the good of the employee or the company..They have ulterior motives beyond those they are there to serve..Too bad..

    Report Post »  
    • Stoic one
      Posted on December 23, 2011 at 12:14pm

      I think that is pretty much how most folks here feel about unions. the political bent ,,,

      Report Post » Stoic one  
  • Goodgriefgeezlouise
    Posted on December 23, 2011 at 11:13am

    One more thought..The same union does groundwork for AA does the ground work for Southwest..There isn’t a whole lot of differences there..But Southwest has been managed far better..imo…Of course the Pilots Union is the same also but with differing benefits…Bankrupcy allows these folks to take all these mistakes and wrap them in a nice ball and start over…Each Airline has used bankrupcy to gain the unfair advantage over the years..I’m sure AA wil come out of this smelling like a rose with new aircraft and happy faces..But the game continues..

    Report Post »  
  • Goodgriefgeezlouise
    Posted on December 23, 2011 at 11:09am

    The ailines have always been alowed to do some suspect deals and have no accountability then rush to bankrupcy..Frank Lorenzo manipulated Continental fo ryear and almost drove it into the ground..United makes a deal with it’s employees so that they become major shareholders in the company only to see the shares cancelled in bankrupcy and then the new shares handed out to management … American had it share of oddities also..The purchasing of Reno Air..(A Robert Crandal relative supposedly benefited big time) Air Cal and of course the oddest of all, the purchase of TWA almost days before they could have picked up the liquidated assets for almost nothing..All of these deals which cost the company enormous amounts of capital have vanished from the planet..As have the brainless theory of creating Hubs in small cities to keep costs down..After putting millions and millions into Nashville, Raleigh-Duram and San Jose now they have completely changed direction and abandoned that strategy and are going to the major cities…As a shareholder, I can’t say that labor costs are the only problem with airlines these days but the labor issue is a good smoke screen for the funny business that these folks like to partake in..Whether intentinal stupidity or sly manipulation, even the Fox business and CNBC‘s don’t pick up the the never ending strange deals that go on with all these airlines

    Report Post »  
  • RodT82721
    Posted on December 23, 2011 at 11:07am

    Barry went on TV to gloat about his big win with the 2 month FICA cut!
    He could hardly contain himself as he talked about that desperate, $50,000 a year tax payer that would perhaps freeze to death, if not for his own generosity. After all those evil Republicans wanted a 12 month extension. Now how horrible was that!

    Barry ran on about his mythical family, without that $40 every two weeks, not being able to buy an extra 12 gallons of heating oil! Then freezing in their unheated house, because that 12 gallons of oil would heat them for the last 3 days before another paycheck. What a tale, right?

    It really does take on new meaning when you realize that Barry just killed the Keystone Pipeline until after he gets re-elected (so as not to enrage his environmentalist donors). A pipeline that would not only put many to work, but will reduce the cost of that 12 gallons of heating oil. Not to mention it’s Barry that has stopped all the oil and gas exploration domestically, and a much production as he can.
    Then his recent EPA rules promising to shut down hundreds of coal fired power plants, a certain promise of sky rocketing energy rates.
    Could those freezing that last 3 days have used electric heaters, if the cost was lower?

    Barry is the most arrogant narcissist to ever infest our White House IMHO!

    Report Post »  
  • lljem60
    Posted on December 23, 2011 at 10:24am

    Republicans up in congress are gutless cowards. As usual the democrats are playing them like a fiddle and the republicans do NOTHING. We can never count on them to mean what they say and say what they
    mean.

    I don’t see kicking the can down the road for a short time will help anything. When congress reconvenes after the holidays it will be the same old thing all over again. The people will be in the same boat not knowing what will happen in the end. Businesses are in worse shape not knowing how they are going to structure their payroll.

    I can’t wait until we can vote all these gutless lowlife republicans out of office! I am really sick and tired of their lack of courage and not standing up for the Constitution.

    Report Post »  
  • truthseekerusa
    Posted on December 23, 2011 at 10:20am

    Woe is to them that call evil good, and good evil;
    that put darkness before light, and light for darkness;
    that put the bitter for the sweet, and sweet for bitter.
    Isaiah 5:20-21.

    Describes Obama and Congress 2011.

    Report Post »  
  • cntrlfrk
    Posted on December 23, 2011 at 9:24am

    If the Republicans keep bowing to the democrats and trumped up media pressure, I may think of voting for a third party candidate!

    Report Post » cntrlfrk  
    • hauschild
      Posted on December 23, 2011 at 9:29am

      Right there with ya, brother.

      If you don’t teach lessons, things will never change.

      Report Post »  
  • hauschild
    Posted on December 23, 2011 at 9:23am

    Sure, what the hell – it’s Christmas. The markets SHOULD go up, dammit!?!?

    This is a strange time we live in, folks.

    Report Post »  
  • smackdown33
    Posted on December 23, 2011 at 9:14am

    Judges should not have the omnipotence demonstrated in the above AMR debacle.

    Report Post »  
    • cemerius
      Posted on December 23, 2011 at 10:19am

      Yes in a bankruptcy. Who would you have directing the ordered bankruptcy? Andy Stern or George Soros?

      Report Post » cemerius  
  • lukerw
    Posted on December 23, 2011 at 9:08am

    Off the edge of the cliff… holding on by the fingers… and proposing a bargain with God!

    Report Post » lukerw  

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