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The Week Ahead



Last week stocks ended mixed as markets see-sawed between worry over exploding bombs in Korea and exploding bonds in Europe, and hopes for a robust kickoff to the U.S. holiday shopping season. The latter two will likely dominate financial news in the week ahead as well.

On Tuesday, we learn how busy Black Friday really was, when Goldman-- ICSC and Redbook Research release their retail reports for the previous week. For now, we can hope: Forecasters like the National Retail Federation and companies like Tiffany have been optimistic that the season would beat last year by 3% to 3.5%, a good showing considering the level of unemployment. That optimism was confirmed by early reports from online retailers, who saw sales jump a robust 16% on Friday, following a 33% rise on Thanksgiving day. (But online sales remain less than a tenth of all holiday spending.)

The debt crisis in what are now being called the "peripheral" economies of Europe continues to rock markets on that continent. Ireland agreed to a bailout from fellow European nations and the International Monetary fund, but that didn't calm anyone: Yields on bonds from Ireland, Portugal and Spain shot up compared to those on German bonds, a measure of how shaky their credit has become. For Americans, the debt crisis abroad has mixed results. International money surged into Treasury bonds, still considered a safe haven. That lowered yields on Treasuries, doing the job that Ben Bernanke hoped to do by promising to buy $600 billion of Treasuries with dollars conjured from thin air. The dollar rose against the Euro, which makes it an economically propitious time to take a holiday vacation in the euro-zone--as long as you don't get caught in a street riot over austerity measures. Americans should have spent the weekend giving thanks that the dollar is a reserve currency and thus we don't have foreign quasi-governmental bodies dictating budgetary policy to Washington. Or maybe that wouldn't be so bad, come to think of it.

Markets weekly close:


  • · Dow: 11092, down 1% for the week
  • · Nasdaq: 2534, up 0.7%
  • · S&P 500: 1189, down 0.9%
  • · Oil: $83.71, up 2.7%
  • · Gold: $1,362, down 0.08%

Factoids:


  • · The average gap between defaulting on a mortgage and losing your house to foreclosure is 492 days. That means that the average family in foreclosure spends more than a year without having to make rent or mortgage payments.
  • · Mickey Drexler is plowing $100 million of his J. Crew stock into a buyout of the company
  • · It's official: Now that investment banks have place all the optional extra shares of GM stock that they were allowed to sell, the GM IPO is the largest ever--$23.1 billion.
  • · Cellphones accounted for 5.6% of online shopping visits on Black Friday.

The week ahead: Tuesday's retail reports should settle the Black Friday question, although there is still plenty of Christmas shopping ahead; traditionally the biggest shopping day is the Saturday before Christmas, not Black Friday. Fed officials will again be out in force, trying to jawbone markets into believing that quantitative easing is good for you.

In Europe, big questions remain: Will the Irish government, which is supposed to implement the budget cuts that are a condition of the bailout, stand? (The coalition government lost a crucial vote in Donegal last week.) Will investors in Irish banks, which are guaranteed by the Irish government, have to take losses? (That could scare the European bond markets even more, raising interest rates on Irish, Portuguese and Spanish bonds to levels that those countries can't afford.) Will the European Central Bank need to bail out Spain next? And if it does, can it come up with the cash? It will be an interesting week.

Other economic data:


Mon 11/29
  • Not much
Tue 11/30: Wed: 11/30: Thurs 12/1: Fri 12/2