The week's top news in world financial markets from Maximus Capital

USA

The Obama administration seeks a $970 billion tax increase over the next decade on Americans earning more than $200,000 and wants to take in an additional $400 billion from businesses even as it retools a proposed crackdown on international tax-avoidance techniques. The administration’s budget would reinstate 10-year-old income tax rates of 36 percent and 39.6 percent for single Americans earning more than $200,000, and joint filers making more than $250,000 as part of a broad $1.9 trillion tax increase proposal. It proposes to eliminate preferences for oil and gas companies, life-insurance products, executives of investment partnerships and U.S.-based companies that operate overseas.

Euro zone

Retail sales in Germany, Europe’s largest economy, increased in December as the improving economic outlook bolstered Christmas spending. Sales, adjusted for inflation and seasonal swings, rose 0.8 percent from November, when they dropped a revised 1.7 percent, the Federal Statistics Office in Wiesbaden reported. Economists expected a gain of 0.9 percent, according to the median of 24 estimates in a Bloomberg News survey. From a year earlier, sales fell 2.5 percent. Germany’s government this month raised its forecast for 2010 economic growth to 1.4 percent from 1.2 percent. While the economy is still grappling with the aftermath of its worst recession since World War II, the government has extended subsidies that encourage companies to hang on to workers, helping to limit an increase in unemployment.
 
CIS countries

Russia’s economy shrank the most on record in 2009 after the price of oil slumped 77 percent from peak to trough and left businesses to start the year trying to adjust to smaller profits as banks cut off credit. Gross domestic product fell 7.9 percent in 2009 after rising 5.6 percent the previous year, the State Statistics Service said, citing preliminary figures. The median forecast of 18 economists in a Bloomberg survey was for an 8.5 percent contraction, in line with the government’s prediction. President Dmitry Medvedev has called 2009 the ‘hardest year’ since Russia’s 1998 default. Banks withheld credit and companies were forced to restructure debts as 12 consecutive months of contracting industrial output depleted earnings. The sudden drop in Urals crude, the country’s chief export, to $32 in December 2008 from a peak of $143 in July that year ended a decade of growth in the world’s biggest energy exporter.

Ukraine will seek to borrow $500 million to $1 billion by selling Eurobonds as early as next quarter, Economy Minister Bohdan Danylyshyn said, as Europe’s hardest hit economy looks for ways to restructure its debt. “We have been analyzing the whole debt system,” Danylyshyn said in an interview in Kiev yesterday. “We are in talks with potential participants of the restructuring from the European Union, the U.S. and Japan.” While the government is considering different currencies for the sale, Danylyshyn said he thinks the bonds should be denominated in euros.

Kazakhstan President Nursultan Nazarbayev, ruler of Central Asia’s largest energy producer for two decades, plans to “test” the loyalty of all citizens in a bid to avoid any form of public protest. “Let’s test how much every citizen wants to work for the good of the country,” Nazarbayev said in a televised address to the nation. All Kazakhs at home and abroad “must reject taking any steps” designed to destabilize the country, Nazarbayev said.

Written using materials from Bloomberg and  Reuters Research