Week Oct 15 2010 – Weekly Recap & The Week Ahead
1. Optimism Rises Ahead Of Nov. Election — Consumer confidence hit a five-month high in early October and the six-month outlook shot up ahead of next month’s midterm elections, according to the IBD/TIPP Economic Optimism Index released Tuesday. The overall sentiment gauge rose 1.1 points to 46.4 as optimism rose among Republicans, who expect to make significant gains in the Nov. 2 polls.
2. FOMC suggests QE2 coming soon — The FOMC minutes, released yesterday, supported market speculation that a second round of quantitative easing will be coming soon, as “several” officials said the Fed would need to act soon unless inflation moves back towards a more consistent level. As expected, the committee cut its growth expectations for the rest of this year and next.
3. Consumer sentiment edges lower in October — The preliminary Reuters-University of Michigan consumer sentiment index edged lower in October, falling to 67.9. Economists polled by MarketWatch expected the index to rise to 69.8 in October from 68.2 last month.
4. U.S. retail sales rise 0.6% in September — Monthly increase is third in a row; August sales revised higher. Excluding motor vehicles, retail sales improved by 0.4% in September. August sales minus autos were also revised higher — up 1.0% from the 0.6% increase originally reported.
5. Foreclosure crisis catches up to bank stocks — all the renewed talk about the foreclosure crisis has finally taken a toll on banks’ shares, with U.S. financial stocks posting notable losses yesterday while the broader market was essentially flat. Bank bonds fell and banks’ credit-default swaps widened.
6. Bullish Sentiment Reaching Exuberant Levels — The latest AAII bullish reading came in at 47.1% – a slight decline from last week, however, still well above the historical average.
The week ahead — Economic data from Econoday.com:
