Europe teeters as U.S. jobs report looms

Flag of the European Union Wikimedia Commons

Bel far niente, the lovely Italian expression that means "the beauty of doing nothing," isn't working out as planned in Europe. The European Central Bank is essentially doing nothing as the EU's debt contagion has spread from smaller countries like Ireland, Portugal, and Greece to the big ones like Italy and Spain. Even Europe's largest economy got a taste of what doing nothing can mean -- Germany failed to get bidders for 35 percent of a 10-year bond auction last week.

But it is Italy, Europe's third-largest economy behind Germany and France, that will captivate investors in the coming days. The country will hold another debt auction as it struggles under the weight of 1.9 trillion euros of debt. Last week, it cost Italy more than 8 percent to borrow money for three years, a level that is not sustainable in the long run and that potentially puts the country on track for needing some sort of bailout.

The topic of Europe is serious enough to keep President Obama in Washington this week. He's hosting a summit to discuss the European debt crisis in Washington with European officials.

As the European economy grinds to a virtual halt, concerns are escalating that US growth will erode. Given the government's recent downward revision of Q3 GDP to 2 percent from the advance report of 2.5 percent, investors will closely monitor the monthly jobs report this week. Without Europe creating so much uncertainty, there might even be a little optimism creeping into the labor market, because the four week average of initial unemployment claims is below 400,000 and is at the lowest level since early April.

The positive weekly data might normally suggest improvement in November, but these are not exactly normal times. How not normal, you ask? Well, U.S. stocks had their worst Thanksgiving week since 1942...yes, 1942. For those who say the results occurred on low volume, I respond as follows: "A lousy week is still a lousy week."

-- DJIA: 11,231, down 4.8% on week, down 3% YTD (down 7.6% over last two weeks and 12 percent below the high of 12,810 reached in April)

-- S&P 500: 1158, down 4.7% on week, down 7.9% YTD (down 8.3%, over the last two weeks and 7.9%, over last seven trading sessions)

-- NASDAQ: 2441, down 5% on week, down 8% YTD (down 10.8% over last four weeks)

-- January Crude Oil: $96.77, down 0.9% on week

-- December Gold: $ 1685.70, down 2.3% on the week

-- AAA National Average Price for Gallon of Regular Gas: $3.30

-- Total bank failures for 2011 = 90 (0 new bank failures over weekend)

FACTOIDS OF THE WEEK: 2011 Holiday Shopping Edition

-- The National Retail Federation (NRF) predicts that holiday sales will rise 2.8 percent, slightly higher than the ten-year average

-- Holiday shoppers plan to spend an average of $704.18 on holiday gifts and seasonal merchandise, down slightly from last year's $718.98 (NRF)

-- Nearly 7 in 10 online retailers expect their sales to grow at least 15 percent this holiday season.(Shop.org's eHoliday survey)

-- The average person plans to do 36 percent of their holiday shopping online - up from 33 percent last year (NRF)

-- One for you and one for me: 6 in 10 holiday shoppers will make "non-gift" purchases for themselves, spending an average of $130 on these purchases, an all-time high and a 16 percent jump from last year's $112 (NRF)

-- Retailers are expected to hire between 480,000 and 500,000 seasonal holiday workers (NRF)

IN THE WEEK AHEAD: Hope you enjoyed that turkey and the L-tryptophan is out of your system, because it's going to be a busy week. It starts with President Obama hosting a summit to discuss the European debt crisis in Washington with European officials and ends with the November jobs report. The current consensus is for 120,000 jobs created and for the unemployment rate to remain at 9 percent. In between those big bookends, there will be data on housing, readings on confidence and manufacturing and sales results for chain stores and motor vehicles.

Mon 11/28:

10:00 New Home Sales

Tues 11/29:

9:00 S&P Case-Shiller Home Price Index

10:00 Consumer Confidence

Weds 11/30:

7:30 Challenger Job Cut Report

8:15 ADP Employment Report

8:30 Productivity and Costs

9:45 Chicago PMI

10:00 Pending Home Sales Index

2:00 Beige Book

Thurs 12/1:

Chain Store Sales, Motor Vehicle Sales

8:30 Weekly Jobless Claims

10:00 ISM Manufacturing Index

10:00 Construction Spending

Fri 12/2:

8:30 November Jobs Report

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    Jill Schlesinger, CFP®, is the Editor-at-Large for CBS MoneyWatch. She covers the economy, markets, investing or anything else with a dollar sign. Prior to the launch of MoneyWatch in 2009, Jill was the chief investment officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.

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