The holiday-shortened trading week of Thanksgiving had most Americans giving thanks for their many blessings over the past year. Unfortunately, for those living in say South Korea had to deal with bombs being lobbed over by their fellow North Korean neighbors. This past week on a global front we also saw the country of Ireland fall to its financial knees, which is the second euro-zone country, after Greece, to call for help in paying its bills. Now there are worries that other countries such as Spain, Portugal and Italy may follow suit. European finance ministers are racing to calm the situation before these unsettled markets opened for trading on Monday.
After all the global turmoil of the holiday week, our U.S. market indexes mostly slumped, with the Dow Jones Industrial Average giving up 1.00% on the week to a level of 11,092 for the holiday-shortened week. The broader Standard & Poor’s 500 Index fell by 0.9% to 1,189.40 and as the other domestic indexes has had a rough November thus far. Meanwhile, the only two major indexes to show gains on the week included the Nasdaq Composite which rose by 0.7%, to 2,534.56 as did the components of the Russell 200 index, which gained 1.2%.
Treasuries not surprisingly drew safe-haven buying throughout last week, as the financial troubles in Ireland led to new worries about the other PIIGS nations, (i.e. Portugal, Ireland, Italy, Greece & Spain.) The yield on the benchmark 10-year note fell to 2.861% from 2.877% at the end of last week. Meanwhile the 30-year bond was yielding 4.219%, down from 4.251%. A lot of this volatility was due to the fact that given that that bond market closed at 1 p.m. CST on Friday, the day after Thanksgiving, traders had been warned that a lack of liquidity might have exaggerated the subsequent price moves.
Get ready…set…shop!! Hundreds of thousands of shoppers crowded malls and stores Friday, snapping up heavily marked-down flat-screen TVs and laptops on the yearly day known as ‘Black Friday.’ Even frosty temperatures with windchill in the negative territory up north didn’t deter lines outside shopping centers throughout the Midwest and northeast. The National Retail Federation estimated that up to 138 million people would shop Friday through Sunday. And though official tallies won’t be out until later, some retailers reported seeing more business on “Black Friday” than they have seen in years. Best Buy, Target, Sears, Macy’s and Toys ‘R’ Us, some of which had earlier openings than past years, or even round-the-clock hours, all reported bigger crowds.
Part of the reason is because consumers are experiencing “frugal fatigue,” said Marshal Cohen, chief industry analyst at research firm NPD Group. Shoppers are gobbling up sale items and even spending on themselves, a sign they are feeling better about the economy, he added. “They have gotten tired of living in this cocoon for so long,” Cohen said. “Some of the people are tired of wearing the same stuff. The sweaters have a lot of pills in them. Their jeans are getting a little bit too tight.” Interest in buying a flat-screen or LCD TV set from Black Friday to this Monday rose 8 percent compared to a year ago, while demand in buying an electronic reader increased 9 percent, according to a Consumer Reports survey.
Retail sales account for 70 percent of the U.S. economy, and Black Friday for several years has been the country’s busiest shopping day. But the day doesn’t always a season make. Retail sales have been dismal throughout the recession as consumers worried about jobs and focused on getting out of debt. Although several retail analysts agreed that ‘Black Friday’ was off to a great start, several analysts were skeptical that the stores could maintain the momentum during most of the holiday shopping season, considering that many shoppers wanted to pay with cash or debit cards. The number of shoppers using credit cards is expected to reach the lowest level since 2002, according to the National Retail Federation. However, the Chicago research firm ShopperTrak, which tallied sales in more than 70,000 retail outlets across the country, said the total for ‘Black Friday’ was still a record for the day. It also stood behind its prediction for spending to rise 2.3 percent for the entire Christmas shopping season.
As we get back from our Thanksgiving feast, we’ll digest several important economic items. On Tuesday we’ll be on the receiving end of the consumer confidence report, which should show more signs of improvement. Come Wednesday, the Fed releases its beige book of regional economic activity and we’ll also get the ISM manufacturing index figures. On Thursday it’ll be the all-important U.S. chain-store sales figures for November (which will include Black Friday) and which should show a strong tally. The best is saved for last as on Friday we’ll get the November employment report, which hopefully will show some more signs of life in the labor market. Right now, the estimated gains for payrolls are all over the place, with the most aggressive coming from PNC Financial Services Group which predicts a 200,000 gain in non farm payroll employment for November and expects the jobless rate to fall to 9.5%.
Sources: Barron’s, The Wall Street Journal, CNN, The New York Times, The Financial Times, Besspoke Investment Group, The Kirk Report