Were crunching the numbers for you. The u. S. Is set to go over the fiscal cliff in five days. That means taxes will go up for nearly every american. Dramatic spending cuts will kick in. President obama and congress will be back from vacation tomorrow. But will anything get done . Plus, wild Winter Weather sweeping through the country. Well bring you the latest details on which part of the u. S. Could be hit next. Cnbcs Worldwide Exchange starts now. And welcome to a special edition of reside worldwide. Ross andcle reoff today for boxes day in kelly are off today for boxing day. For now, you is us. Well start with a brief check on the markets. Energy and metals are trading higher now, wtis up about 55 cents. Brent crude up 65 cents. Also want to check in on the gold price, as well. Gold right now down about slightly under the flat line there, 1,658. Well below the 1,700 mark. The cme globex has been closed for christmas. Its going to reopen at 6 00 a. M. Eastern time. That goes for treasuries and the Foreign Exchange market, as well. As for action in the overseas markets, the u. K. Is closed today for boxing day as are some of the former brish colonies. In europe the dax down about there about 35 points, around half a percent. And overnight in japan, the nikkei, the yen falling to a 20month low. You have the nikkei up 1. 5 . The nikkei yen versus the dollar as shinzo abe returns to office as japans new prime minister, promising monetary and fiscal reforms. We have the shanghai composite there up about a quarter percent. All right. In todays top stories, the u. S. Is five days away from going over the fiscal cliff. President obama is cutting his holiday vacation short, returning to washington tomorrow to continue talks to try to avoid that automatic tax hike and spending cut combination. Thats the same day that Congress Returns to town. Before the president left town on friday, he suggested a stopgap measure to freeze tax rates for people making less than 250,000 a year and extend unemployment benefits. Reports say white house staffers have been quietly working with Senate Democrats to come up with a plan to avoid the fiscal cliff, but little progress has been made. A chinese Ratings Agency is putting the u. S. On negative watch citing troubles with longterm debt issues. On a statement on its web site, global credit says each Political Party insists on the proposition favorable for its own interest. It expects u. S. Debt to rise to 105 of gdp this year and warns the country will probably fall into recession in 2013 if theres no resolution to the fiscal cliff. Last year, it cut u. S. Treasuries from a to aplus with a negative outlook. And the Holiday Shopping season is drying to a close. Early numbers suggest what started out strong is ending with a whimper. Mastercard spending pulse unit estimates sales rose. 7 over the past two months, which would be the weakest pace since 2008 during the financial crisis. Many analysts had expected sales to rise 3 to 4 . Several events may have, of course, pushed consumers to spend less this season including Hurricane Sandy and concerns about how tax hikes from the fiscal cliff could impact their wallets. Joining us for more on the numbers is Michael Mcnamara of mastercard advisers. Great to have you with us. Many analysts, retailers had high hopes for the season. I think its looking weaker than expected. Of course we had Hurricane Sandy and were dealing with the fiscal cliff, as well. What do you think the big driver was of these Slower Growth numbers . Well, good morning. Yes, you hit on two of the big ones. Really the season tripped coming out of the starting gate with Hurricane Sandy. The impact in the northeast and midatlantic, both those regions of the country actually had negative holiday seasons for the holidayrelated sectors that we track. Other areas of the country that were not impacted by significant weather in the southeast, South Central, mountain and west, were up 2 to 4 year over year. So really depended on where you were in the country, how but during the holiday season. Okay. Thats definitely interesting to look at, the regional breakdown. I also want to talk about promotions. Every year we see the promotions start, it seems, earlier, and discounts are a little deeper. At the end of the day when were tabulating these numbers, are deep discounts really the way to go, or does it end up hurting the retailers in the end . I think a couple of events, the weakness in the first part of november did spur some additional discounting in november. And that did seem to be effective in generating sales growth in the second half of november. That was relatively positive. The real issue was then early december, sales did decline again. And i think that had to stir really stimulate additional discounting that might have been somewhat negative for Margin Expansion for the retailers. It was a difficult season. All right. I want to talk about the online sales, as well. Its obviously easier for a lot of consumers to stay home and point and click the mouse and have the presents just be delivered. Comparing in terms of online, it seemed that this was a strong start after black friday with cyber monday. Some numbers came in really high. Do you think the online or the brick and mortar is going to be strong when the numbers shake out . At the end of the day, online sales during the same period were up about 8. 4 . We did see some good growth rate, again, right around the thanksgiving week and the week after thanksgiving that were in the 18 to 20 range for a brief period of time. However, you did see weak not at the beginning of november and returning in december that brought the numbers back down. Whether poor weather conditions at the end of the season did help the online category or channel increase sales again back to the low teens at the end of the season. How much of the fiscal cliff or do you think the doubt around reaching a negotiation is impacting Holiday Spending this season . Did that damper sales by any chance . Yeah, theres a theres a correlation here. Beginning of december when we start to see sales come down, the confidence numbers also start to come down. Its something that the Media Coverage really has brought home and really clarified what the fiscal cliff means to personal finance. And that debate really seems to be acting as almost creating a sense of gravity thats pulling down different elements of the economy. So whether its Consumer Confidence and now spending, both seem to be having a negative impact on the environment. Yeah. Michael, i imagine its difficult to get out and want to spend when youre worried about your taxes going up next year. And how youre going to allocate your budget. I want to ask about some of the places that we did see spending. What were some of the segment groups . Was it apparel, electronics . You know, luxury has surprisingly held up a little bit. So where did we see the dollars that were spent go . Sure. Lets start with luxury. Luxury nationally had a difficult year because primarily because about 20 of Luxury Retail sales originated out of the new york area. If new york has a difficult season, thats going to be difficult on the overall numbers. That said, in the southeast and the South Central regions of the country, luxury sales were up 5 to 6 . So again, it depended where you were. But Luxury Retail sales did relatively well. Other sectors, womens apparel did have a positive year. As well as furniture and furnishing were also up. Primarily we think due to the Housing Market recovery. Yeah. Today also a big day for returns, i dont know if you got gifts and are planning on taking time off later to be able to swap them back. Michael, how does the return situation impact the numbers that we see . Were going to have a lot of people going to the malls, right . A couple of thing will happen. One, theyll be returning items. You may get even exchanges there. I wonder if theyre going to be spending more because theyre out and about with their families. And also you have the issue of the gift cards because that the retail, the revenue from the gift cards is going to be booked once those gift cards are actually used. So how do these few days after christmas impact the numbers . Well, first of all, im not returning anything. So anyone anyone gave me anything for christmas, dont worry. I love it. But in terms of gift card sales, youre absolutely right on the accounting on that. The late season storm, big blizzard that came across northern regions of the country, that may have stimulated additional gift card purchases. That tends to be a lastminute purchase area. So this last period of time, normally it accounts for the last week of december. Accounts for about 15 of december retail sales. But that gift card redemption, that generates a lot of store traffic and a lot of opportunity for retailers to make up and clear out inventory for any sales that didnt occur during the season itself. All right. Certainly well be watching that. Of course, i like gift cards because it gives you the opportunity to get what you want instead of the ugly christmas sweaters that we saw yesterday. One last question. It seems like its an issue of Consumer Confidence out there now. Whats it going to take it get Consumer Confidence back up . Well, i mean, i think we need to get resolution and certainty around whats happening with the fiscal cliff. You need to know whats going what is your paycheck going to look like in the first part of january. And what happen are your taxes ultimately going to be next year. Until we get clarity around that, the same thing that we saw, corporate spending, Business Activity start to pick up on this last summer and fall. And now consumers in november and december started to pick up on this, as well, in that you really need to get resolution here in order for the economy to move forward. Yeah. So Many Americans, of course, going to be waiting with baited breath to see what happens with the fiscal cliff. Thank you very much for joining us from mastercard advisers. Terrific. Thank you. The u. S. Economy is hanging in the balance with just five days left for congress to come up with a deal to avert the fiscal cliff. Lets get to our senior economic reporter, steve leesman, with his predictions for the economy in 2013. Reporter trying to figure out whats going to happen in 2013 depends on one very Important Development whether the u. S. Goes over the fiscal cliff in a few days time, and for how long. If its avoided, theres considerable upside for the economy. We could see at least one and maybe two quarters of growth above 3 . The kind of growth that would put people back to work and lower the unemployment rate. Why . Because business has been Holding Back Investment amid the uncertainty. Unleashing business spending would add to the growth from the nascent rebound in housing and from the consumer who has hung in there despite tough times. In fact, we could see unemployment drop below 7 . Although it might first rise, more work into the work force who have been discouraged but cant find work. Then could it fall. As for the fed, i think the market may be overstating its expectations for assets purchased from the central bank in 2013. At the current pace, the new round of quantitative easing will add 1 trillion to the balance sheet. I think its likely to come in less, maybe in the 750 billion range. A lot, just not as much as markets think. So if we get the growth and the lower unemployment, that would likely mean somewhat higher interest rates. The attention will be fed asset purchases meant to keep down longterm rates, and better growth which will push them higher. Im predicting we end next were with a 2 to 2. 25 tenyear treasury. So Mortgage Rates may already be as low as they will get. Those are my predictions for 2013. All right. Our thanks to steve for that. Meantime, coming up on the show, will washington be able to get its act together to avoid letting the u. S. Economy fall off a cliff . Weve got a panel of washington insiders to give you the real story. Plus, a closer look at the markets including a best emerging market performer this year. If you invested in this index, youdi inbe up 50 . Well tell you what it is and what could see a pop next year. Well bring you retail numbers as they trickle in. Much coming up. [ male announcer ] its that time of year again. Time for citi price rewind. Because your daughter really wants that pink castle thing. And you really dont want to pay more than you have to. Only citi price rewind automatically searches for the lowest price. And if it finds one, you get refunded the difference. Just use your citi card and register your purchase online. Have a super sparkly day ok. [ male announcer ] now all you need is a magic carriage. Citi price rewind. Start saving at citi. Com pricerewind. You can stay in and share something. Or you can get out there and actually share something. The lexus december to remember sales event is on. This is the pursuit of perfection. Welcome back to Worldwide Exchange. If youre traveling around london today, you better take the bus or hail a cab. For the Third Straight year, hundreds of London Underground workers and drivers have gone on a 24hour strike on boxing day. The first day of postchristmas retail sales. The union has a longrunning dispute with tube management over bank holiday pay. And here in the u. S. , support strike could be brewing. Federal mediators have called for a meeting of east and gulf coast dock workers and shippers as they try to avoid possible strike next week. Talks broke down december 18. And the unions contract extension expires monday. The union represent more than 14,000 workers at more than a dozen ports from boston to houston. The key Sticking Point container royalties or payments to Union Workers based on the weight of cargo. Now back to the markets. Before the break, we told you about the best performing emerging markets this year. But emerging markets this year. The third best performing market this year is estonia, up 36. 51 . And at number two is pakistan with the Karachi Stock Exchange 100, up 49 for 2012. And the best performing market so far this year is turkeys ise national 100 index. Up 52. 26 this year. Now our next guest says a play in the emerging markets could be a good bet for a successful 2013. Joining us now to highlight the key markets to watch around the globe is ron shaw, managing partner at gina ventures. How are you doing . Good. Good morning. Very good morning to you. Did santa bring you everything you were hoping for . That and then some. That and then some. Good. Lets talk about emerging markets now. Ive spoken to you a lot about how in the last couple of years, of course, there has been a lot of positive sentiment around investing in emerging markets. However, i got to say over the past couple of months and even this year, there has been i would say the mood shifting to cautiously optimistic. Can you tell us whats driving that change . Yeah. I think you have to continue to be cautiously optimistic for the emerging markets because obviously theres a growth story there. Theres a lot of growth that investors want to capture. Theres still a lot of outstanding risk. We saw a lot of that risk play out this year both on the government side, the reform side, as well as currencies. So i think theres definitely a handful of risks. And you have to kind of the play for emerging markets is change. I think when you used to invest as efts, you have to look at the markets differently. I think you have to be more careful. All right. Lets focus on india. I know you just got back from a long trip where you were evaluating the investment landscape in india. Obviously weve seen a lot of Foreign Investors allocate capital into this market. We are looking at the rupee depreciating significantly over the last year. The company dealing with other problems including lack of infrastructure, some policy changes. What is your recent i guess your updated outlook on india Going Forward . Well, the local market has justice done phenomenally in 2012. Up 25 . But it didnt help u. S. Dollar investors because the currency fell the same amount. So really everyone kind of broke even even though the market took off this year. I think india is still a market where you want to keep building positions gradually over time. Theres been a lot of issues around the government. I think the instakt around the government and peoples predicting how long it will take to push back reforms has impacted the market quite a bit. I think one thing under the surface in india and china that all investors need to be aware of is the fact that corporate debt is now really building up to almost unhealthy levels. And i would keep an eye on where corporate debt levels are in Companies Investing in. When i was a corporate analyst in india tracking markets, technology was considered the engine of growth for the country and one of the bright spots for the market. Is Technology Still one of the areas you are tell clients to invest in in india, or what are the sectors youre looking at . I think theres two sectors whether you look at india, china, or asia. Theres two sectors we like. Its technology, as you said. I think thats one that its a bright gem. You know, it went from, in india, from a bpo outsourcing business and has grown to an innovation business where brands are being developed and real technological gains are being had. The other sector we like is health care. The demand for health care in these markets is just continuing to grow steadily. Obviously people are having l