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Daily News Briefing: Wednesday, August 8, 2012

Published by: Clark Barrow

Clark Barrow

DAILY BRIEFING - SUMMARY

  • PAPA JOHN'S - Pizza chain Papa John's told shareholders that President Obama's health care law will cost consumers more on their pizza.
  • CRONYISM - A new report from the conservative Government Accountability Institute (GAI) finds that President Obama’s and U.S. Attorney General Eric Holder’s failure to criminally charge any top Wall Street bankers is likely a result of cronyism inside the U.S. Department of Justice and political donations made to Obama’s campaign.
  • WHITE HOUSE - President Obama on Tuesday signed a law requiring the White House budget office to reveal exactly how automatic budget cuts looming in January 2013 will be carried out.
  • PRISONER EXCHANGE - The Obama administration, in a move aimed at reviving Afghan peace talks, has sweetened a proposed deal under which it would transfer Taliban detainees from Guantanamo Bay prison in exchange for a U.S. soldier held by Taliban allies in Pakistan.
  • DEFICIT - The U.S. federal government will report a budget deficit of about $975 billion for the first 10 months of the fiscal year, slightly less than the $1.1 trillion budget gap during the same period last year, the Congressional Budget Office said on Tuesday.
  • NATURAL GAS - Lawmakers ratcheted up pressure on the Obama administration on Tuesday to speed approval for companies to export natural gas, arguing it would help relieve a glut dampening output of the fuel.
  • IRAN - Iran's nuclear enrichment program is progressing faster than western intelligence had initially realized, raising the stakes in Iran's showdown with the international community over the controversial program.

WHAT WE KNOW

ECONOMIC NEWS

  • PAPA JOHN'S - Pizza chain Papa John's told shareholders that President Obama's health care law will cost consumers more on their pizza.
    • On a conference call last week, CEO and founder John Schnatter (a Mitt Romney supporter and fundraiser) said the health care law's changes — set to go into effect in 2014 — will result in higher costs for the company — which they vowed to pass onto consumers.
    • "Our best estimate is that the Obamacare will cost 11 to 14 cents per pizza, or 15 to 20 cents per order from a corporate basis," Schnatter said.
  • JOBS - U.S. employers posted the most job openings in four years in June, a positive sign that hiring may pick up.
    • The U.S. Labor Department said Tuesday job openings rose to a seasonally adjusted 3.8 million in June, up from 3.7 million in May. That's the most since July 2008. Layoffs fell.
    • The data follow Friday's report that said employers in July added the most jobs in five months. A rise in openings could signal better hiring in the coming months. It typically takes one to three months to fill a job.
  • The Dow Jones Industrial Average added 51.09 points, or 0.4%, to 13,168.60.
  • The S&P 500 index rose 7.12 points, or 0.5%, to 1,401.35.
  • The Nasdaq Composite advanced 25.95 points, or 0.9%, to 3,015.86.

COMMODITIES

  • The U.S. national average for a gallon of regular gasoline is $3.64.
    • When President Obama was inaugurated, in January 2009, the U.S. national average for a gallon of regular gasoline was $1.85. Average gasoline prices are currently 97 percent higher than they were when Mr. Obama became president.
  • Crude oil for September delivery advanced $1.47, or 1.6%, to settle at $93.67 a barrel on the New York Mercantile Exchange.
  • Gold for December delivery declined $3.40, or 0.2%, to settle at $1,612.80 an ounce on the Comex division of the New York Mercantile Exchange.

NEWS TO WATCH

  • ELECTION - As of today, there are 90 days until the November 2012 presidential election.
  • CRONYISM - A new report from the conservative Government Accountability Institute (GAI) finds that President Obama’s and U.S. Attorney General Eric Holder’s failure to criminally charge any top Wall Street bankers is likely a result of cronyism inside the U.S. Department of Justice and political donations made to Obama’s campaign.
    • Despite Obama’s and Holder’s “heated rhetoric” against Wall Street (in 2009, Obama blamed the 2008 financial collapse on “reckless speculation of bankers” while Holder charged that “unscrupulous executives, Ponzi scheme operators and common criminals alike have targeted the pocketbooks and retirement accounts of middle class Americans”), they haven’t “filed a single criminal charge against any top executive of an elite financial institution,” GAI wrote in its report.
    • GAI argues that the Obama administration’s decision to not go after Big Finance is due to senior DOJ leadership — Holder, Associate Attorney General Tom Perrelli, Associate Attorney General Tony West, Assistant Attorney General Lanny Breuer, Deputy Attorney General James Cole and Deputy Associate Attorney General Karol Mason — who “all came to the DOJ from prestigious white-collar defense firms where they represented the very financial institutions the DOJ is supposed to investigate.”
  • CONGRESS - Congress will vote to extend a $12 billion federal tax credit for utility-scale wind energy projects that is in danger of expiring at the end of the year, Senate Majority Leader Harry Reid said at a clean energy summit in Las Vegas on Tuesday.
    • The credit provides a production tax break for wind energy of 2.1 cents per kilowatt hour, an incentive that the industry says is essential to developing more wind farms and supporting jobs at wind manufacturing plants.
    • The head of the world's biggest wind turbine maker, Denmark's Vestas Wind Systems, has said that the U.S. wind turbine market would likely fall by 80 percent next year if the credit expired. The decision is also being closely watched by manufacturers such as the U.S.'s General Electric, Germany's Siemens, Spain's Gamesa and India's Suzlon Energy.
  • WHITE HOUSE - President Obama on Tuesday signed a law requiring the White House budget office to reveal exactly how automatic budget cuts looming in January 2013 will be carried out.
    • The Sequestration Transparency Act was passed by the U.S. House in July by a 414-2 vote. The U.S. Senate approved it unanimously later in the month.
    • Under last August’s debt-ceiling deal, $109 billion in automatic spending cuts are to hit in January to punish politicians for failing to come up with a bipartisan deficit-reduction plan last year as part of the supercommittee process.
  • WHITE HOUSE - The Obama administration is authorizing an additional $30 million to help farmers and ranchers in areas hit by the severe drought.
    • Obama announced a series of steps to aid families and businesses impacted by the worst drought in 25 years, including increasing lending to small businesses and a Department of Transportation initiative to help commercial truck drivers provide much-needed supplies to the affected areas.
    • More than 60 percent of the continental United States, including prime farm and ranch territory, is suffering moderate to exceptional drought. Analysts expect the drought will bring the smallest corn crop in six years. The government will make its first estimate of the fall harvest on Friday.

PRESIDENT’S SCHEDULE

  • In the morning, President Obama will depart Washington, D.C. and travel to Denver, Colorado.
  • In the afternoon, the president will attend a grassroots event Auraria Event Center in Denver, Colorado.
  • Later in the afternoon, the president will depart Denver, Colorado and travel to Grand Junction, Colorado.
  • Later, the president will attend a grassroots event at the Grand Junction High School in Grand Junction, Colorado.
  • In the evening, the president will depart Grand Junction, Colorado and travel to Pueblo, Colorado. The president will remain overnight in Pueblo, Colorado.

HAPPENING IN THE U.S. CONGRESS

U.S. SENATE

  • The U.S. Senate is not in session today.

U.S. HOUSE OF REPRESENTATIVES

  • The U.S. House is not in session today.

TOPICS OF INTEREST

NATIONAL SECURITY

  • PRISONER EXCHANGE - The Obama administration, in a move aimed at reviving Afghan peace talks, has sweetened a proposed deal under which it would transfer Taliban detainees from Guantanamo Bay prison in exchange for a U.S. soldier held by Taliban allies in Pakistan.
    • The revised proposal, a concession from an earlier U.S. offer, would alter the sequence of the move of five senior Taliban figures held for years at the U.S. military prison to the Gulf state of Qatar, sources familiar with the issue said. The revised proposal would send all five Taliban prisoners to Qatar first. Only then would the Taliban be required to release Sergeant Bowe Bergdahl, the only U.S. prisoner of war.
    • U.S. officials have hoped the prisoner exchange, proposed as a good-faith move in initial discussions between U.S. negotiators and Taliban officials, would open the door to peace talks between militants and the government of Afghan President Hamid Karzai.
    • Previously, U.S. officials had proposed dividing the Taliban prisoners into two groups, and requiring Bergdahl's release as a good-faith gesture to come before the second group of prisoners would be moved out of Guantanamo.

FEDERAL GOVERNMENT

  • DEFICIT - The U.S. federal government will report a budget deficit of about $975 billion for the first 10 months of the fiscal year, slightly less than the $1.1 trillion budget gap during the same period last year, the Congressional Budget Office said on Tuesday.
    • The deficit estimates appear in line with the latest projection by the White House of a $1.2 trillion deficit for the entire fiscal year ending on September 30. The CBO in January projected a $1.1 trillion deficit for the year and will update that forecast and provide an estimate for next year's budget deficit in its economic outlook to be released on August 22.
    • The non-partisan budget agency for Congress said in its monthly budget report released on Tuesday that revenues were 6 percent higher in the first 10 months of fiscal year 2012, which began on October 1, 2011, than they were during the same period a year ago.

ENERGY

  • NATURAL GAS - Lawmakers ratcheted up pressure on the Obama administration on Tuesday to speed approval for companies to export natural gas, arguing it would help relieve a glut dampening output of the fuel.
    • The U.S. Department of Energy, or DOE, "does not seem to have a set timeline for decisions or a sense of urgency," about approving exports of liquefied natural gas, or LNG, Representatives Gene Green, a Texas Democrat, and James Lankford, an Oklahoma Republican, said in a letter to Energy Secretary Steven Chu.
    • The U.S. natural gas revolution, spurred by wide development of hydraulic fracturing, or fracking, directional drilling and other technologies, has brought with it a push to build export terminals to send the fuel to markets in Asia and Europe where prices for gas are far higher.
    • The department is allowed to quickly approve applications to export gas to South Korea, Chile and more than a dozen other countries that have free-trade agreements with the United States. Applications for exports to countries that do not have the agreements with Washington require a more thorough process.

FOREIGN POLICY

MIDDLE EAST

  • YEMEN - The United States will provide Yemen with the largest amount of U.S. government assistance to date for both the civilian and security sectors, the U.S. State Department announced Tuesday.
    • The Obama administration will provide $337 million in assistance in the 2012 fiscal year, up from $147 million provided in the previous fiscal year, the State Department said in a news release.
    • The United States has an interest in ensuring stability in Yemen, which is one of the poorest countries in the Arab world and one where a democratic transition is still under way. Al Qaeda in the Arabian Peninsula (AQAP), the organization's most lethal affiliate, is based in the southern portion of the country.
  • SYRIA - Syria's President Bashar al-Assad won a pledge of support on Tuesday from regional ally Iran as his forces tried to choke off rebels in the northern city of Aleppo.
    • Seeking to restore his authority after suffering the gravest setbacks so far in the 17-month-old uprising, culminating in the defection of his prime minister on Monday, Assad was shown on television meeting a senior Iranian official.
    • The endorsement comes at a helpful time for Assad, as his troops move on the city of Aleppo with massive firepower, trying to drive out rebel forces. Iran says it may provide humanitarian aid to Syria; the rebels say they’re low on ammunition, with government forces closing in on both sides.
    • The Syrian opposition is increasingly is increasingly viewing America with suspicion and resentment for its failure to offer little more than verbal encouragement to the revolutionaries.
    • The rebels say they don’t want direct military intervention in the form of troops on the ground. But they have repeatedly appealed for a no-fly zone similar to the effort that helped Libyan rebels topple Moammar Gaddafi last year and for supplies of heavy weapons to counter the regime’s vastly superior firepower, say rebels and opposition figures.
  • IRAN - Iran's nuclear enrichment program is progressing faster than western intelligence had initially realized, raising the stakes in Iran's showdown with the international community over the controversial program.
    • The assessment that Iran was ahead of schedule in its enrichment work is based on new information gathered by Israel and several other western intelligence agencies.
    • Senior diplomats from the United States, the United Kingdom, Germany, France and Israel have reportedly agreed the new-found information proves Iran's nuclear ambitions have far exceeded previous assessments by the United States and its allies, according to the report.

AFRICA

  • EGYPT - Egyptian security officials and residents say Egyptian military attack helicopters have fired missiles on suspected Islamic militants in Sinai after an attack on security checkpoints.
  • Security officials say it is the first time that the army has fired missiles in Sinai since the 1973 war with Israel to recapture the Sinai Peninsula.
  • In Sunday's attack, 35 gunmen in Bedouin clothing opened fire on the troops before crossing into the Jewish state in an armored vehicle, Egyptian officials said. Israel said five gunmen were killed on its side.