Week Ahead: Congress Ponders the Tax Deal

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All eyes will be on Congress next week as investors watch to see whether President Obama’s tax compromise with Republicans leaders has enough support to pass into law.

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If it does, nearly all Americans who pay income taxes will avoid a tax increase for at least two years.

The first vote is planned for Monday on legislation that would extend individual tax cuts for two years and extend jobless benefits for one year, at a cost of about $858 billion.

Government data for retail sales and housing starts and building permits are expected to show growth in November, as the U.S. economy continues to slowly recover from a bruising recession.

Meanwhile, quarterly earnings reports are expected from consumer-electronics retailer Best Buy Co. (BBY), package-shipping giant FedEx Corp. (FDX) and business-software giant Oracle Corp. (NASDAQ:ORCL).

The Department of Commerce's retail-sales report for November is expected to show growth of 0.8%, and 0.6% excluding motor vehicles and parts, according to Briefing.com. The results come after strong October growth, as consumers become more confident about the economic climate, although high unemployment remains a concern.

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Housing starts and building permits data for November are due out Thursday, with both metrics expected to report an increase from October's disappointing showing. Still, housing starts are at extremely low levels and the outlook is still murky amid high levels of unsold new homes.

Also next week, the Consumer Price Index, a measure of the price level of a fixed market basket of goods and services purchased by consumers, is again projected to inch up in November, in what would be the fifth consecutive monthly increase.

Best Buy, FedEx, General Mills Inc. (GIS) and Research in Motion Ltd. (RIMM) are among the companies set to report their latest quarterly results next week. All four companies are expected to report revenue and profit growth from a year ago, according to analysts polled by Thomson Reuters.

Oracle will announce its fiscal second-quarter results Thursday, in the first financial results since the business-software company won a record judgment against SAP AG (SAP).

The Irish opposition party Fine Gael said it will discuss its position on the country's EUR67.5 billion aid package at a meeting of senior party figures next week. Ireland's parliament will vote on it Wednesday, Prime Minister Brian Cowen said Thursday. He said the package negotiated by the International Monetary Fund and the European Union is in the nation's best interest.

Herman Van Rompuy, president of the European Council, Thursday called for European governments to agree to a limited change to the European Union treaty next week that will allow the creation of a permanent mechanism to bail out troubled EU economies. He said he believed European leaders would do "whatever it takes" to ensure the financial stability of the euro region.

The council of cash-strapped Harrisburg, the capital of Pennsylvania, is expected to vote on the city's $57 million 2011 budget next week. Harrisburg earlier this week disclosed officials mistakenly failed to fully budget its general obligation debt for 2011 and currently don't have enough to make the next payments due in March.

Preliminary trade for the yuan-ruble pair will begin on Moscow's Micex exchange next week, while China is looking to use rubles to pay for Russian timber, seafood and coal as the two countries seek to strengthen currency ties while sidestepping the dollar. The Micex will trade CNY3 million ($451,000) daily starting Dec. 15, officials at the country's largest market by volume said at a Moscow conference. Both Russia and China have in the last several years called for countries to lessen their reliance on the U.S. dollar.