Weekly Outlook

Quote of the week. “Life is like a ten-speed bicycle. Most of us have gears we never use.” –Charles Schulz

Weekly Tip. If you are a new parent, you have 18 years to save for your child's university tuition. Consider an opening an education account in which earnings can compound with tax deferral.

House Speaker John Boehner and Senate Majority Leader Harry Reid both called Friday's fiscal cliff meeting with President Obama and the White House economic team "constructive". Speaker Boehner noted that he had introduced a framework for tax reform, adding that tax increases might be accepted if "accompanied by serious spending cuts". President Obama is in Asia this week; members of his senior team will continue talks with leaders of Congress. House Minority Leader Nancy Pelosi urged lawmakers to set "a deadline before Christmas" to resolve the dilemma, emphasizing the need to "send a message of confidence to consumers [and] the markets" in the coming weeks. Friday, the Wall Street Journal published reports of "advanced talks" at the White House about a deal to postpone January's planned $100 billion in spending cuts for 6-12 months while smaller and more targeted cuts and tax increases are made in the interim.1,2

The storm may have had an effect. The Commerce Department noted a 0.3% overall drop in retail purchases for October, with core retail sales down 0.1%. This follows a (revised) 1.3% gain for September and a 1.0% advance in August.3

Consumer prices ticked up but 0.1% last month, compared to 0.6% in September. Wholesale inflation lessened for the first time in five months in October; the Producer Price Index retreated 0.2% after rising 1.1% in the prior month. Annual consumer inflation was running at 2.2% in October.4

The Dow lost 1.77% last week, while the NASDAQ and S&P 500 respectively lost 1.78% and 1.45%. On Friday, the Dow closed at 12,588.31, the NASDAQ at 2,853.13 and the S&P at 1,359.88. COMEX gold settled Friday at $1,712.30 per ounce; NYMEX crude ended the trading week at just $86.62 a barrel.5,6,7

THIS WEEK: Monday, earnings from Lowe's, Jack in the Box, Tyson Foods and Urban Outfitters are released, plus NAR's report on existing home sales. Tuesday, data on October housing starts arrives; Fed Chairman Ben Bernanke speaks at the Economic Club of New York. November's final University of Michigan consumer sentiment survey arrives Wednesday, and so do the latest initial jobless claims. Thanksgiving is Thursday; U.S. financial markets will be closed. Black Friday follows, with the NYSE closing for business at 1:00pm EST.