As Bank of America (BAC) recently announced plans to repay it's $45 billion borrowed under the TARP program, simultaneously news broke covering the request for deferral of nearly $60 billion of borrowed funds by the Dubai World sovereign fund. One could deem the global financial arena murky at best, as anticipated economic data will cover a short list for this December 7-12, 2009 trading week. Gold retreated over the weekend further from the 1200 level to 1145 as speculation over the Fed's interest rate policy caused the U.S. Dollar to strengthen, by default weakening all commodities and stocks as traders crack knuckles into the opening bell. This could be the start of a dead cat bounce for the dollar...
Monday
Monday will see a 3-month and 6-month Treasury bill auction at 11:30 AM; two breeds of security which have been attracting bid-to-cover ratios of 3.9 and 3.5 respectively. At 3:00 PM the most watched data of the day may change the tides in markets, with the announcement of revolving and non-revolving U.S. Consumer Credit. The street expects an 8.8% decline in the October headline figure, slightly less severe than the -14.8% deterioration in September, but what would be another sign of tighter consumer budgets in the long list of declines.
Tuesday
Watch ICSC Goldman Store Sales and the Redbook year-over-year sales numbers for more guidance into the 2009 Holiday sales trend following the high traffic on Black Friday. Reports of holiday spending and consumer polls have sent mixed signals thus far. A November 2009 Gallop poll showed that average spending for the Thanksgiving holiday week was roughly flat when compared to 2008, but that the week after thanksgiving spending averages were lower
Wednesday
MBA Purchase applications will be closely watched on Wednesday as recent reports are showing spurts of strength in housing as the government tax refund stimulus has been extended until June of 2010. The EIA petroleum status report will be significant as Crude Oil Futures bob for traction amidst the hesitating fall in the dollar. While less publicized, the 10-year Treasury Note auction at 1:00 PM will be closely watched for real change in demand for the benchmark Treasury security as rumors abound of a shift in monetary policy. A stronger dollar may yield weak demand for the Note as investors are less apt to gobble up the debt amidst rising rates.
Thursday
The October International Trade balance will come first at 8:30 AM Thursday morning, and is expected to show marginal change from the -36.5% trade deficit in September. Jobless Claims at 8:30 AM will come scrutinized this week, following last Friday's drop in the home survey of unemployed persons from 10.2% to 10%, and regarding the applied effects on consumer spending for the 2009 year end.
Friday
We may get a little Santa sneak peak on Friday at 8:30 AM as the Retail Sales report for November comes in above or below the 0.9% growth from 1.4% in October, where a negative number or near even result would paint retail traders truly bearish. Perhaps the best gauge of weekly consumer faith will come at 9:55 AM as the first leg of the December Consumer Sentiment report, which is expected to show a minor up-tick from November's 67.4 to 68.2, yet forward looking monthly averages have been falling since the end of September. The inventory report at 10:00 AM is expected to show a minor -0.2% drop in inventories to level out the Inventory to Sales (I/S) ratio at 1.32 for October.
The week will see some meaningful data, but weekend news suggests the trading focus may be aimed more at news from the Fed, financial firms (BAC & C), and foreign financial situations (Dubai World). Any further rumors concerning an accelerated time table for Fed Funds rate hikes or meaningful rhetoric from regulators promoting the same perception will undoubtedly send the dollar higher and all else lower.
