Money Watch Weekly Wrap
The debt ceiling debate dominated the week's news, overshadowing earnings and economic data. (For a debt ceiling primer, check out this quick segment with CBS TV stations: "Debt Ceiling: What Happens on Aug 2?"
Although it's hard to have confidence in politicians, it is seen as unlikely that they would put the economy at risk in such a brazen way. More to the point, they're unwilling to put their own jobs at risk! Senator McConnell (R) noted that if the US defaults, people would blame the Republicans, because they control the House a d that blame would surely spill over into the next elections and potentially beyond. Anyone think that politicians are ready to lose their jobs over this debate? Me neither, but you never know...
Maybe the drumbeat of bad news -- from Europe to the debt ceiling debate -- is wearing on people. The July consumer sentiment fell to the lowest level since March 2009. Still, despite backing off the recent highs last week, many are wondering how stocks can actually be up after so much bad news. To address that question, we put together a quick answer: "Economy Struggles, Stock Market Nears All -Time High".
- DJIA: 12,479, down 1.4% on week, up 7.8% YTD
- S&P 500: 1316, down 2% on week, up 4.6% YTD
- NASDAQ: 2789, down 2.4% on week, up 5.1% YTD
- August Crude Oil: $97.24, up 1% on week
- August Gold: $1590.10, up 3% on the week (up over 7% in last 2 weeks)
Total bank failures for 2011 = 55 (4 new bank failures over weekend)
FACTOIDS OF THE WEEK: Debt Ceiling Edition
- Deficit = Money Gov takes in - Money Gov Spends
- Deficit = $1.3 Trillion
- National Debt = Amount borrowed year after year
- National Debt = $14.3 Trillion
- Debt Ceiling = $14.3 Trillion
- Obama's Grand Bargain: Reduce deficits by $4T over next 10 years by cutting spending and raising taxes (Odds of passing: LOW)
- House GOP Plan: Cut spending by $2.4T over next 10 years, impose statutory spending cap and pass constitutional amendment requiring balanced budget (Odds of passing: LOW)
- McConnell/Reid Plan B: President would raise debt ceiling by $2.5T in 3 installments through 2012. Congress could vote to block increases, but to do so would require 2/3 majority in both houses to override likely veto. (Odds of passing: RISING)
IN THE WEEK AHEAD: As the debt ceiling debate continues, investors will absorb earnings from financial giants Wells Fargo, Goldman Sachs, Bank of America, Morgan Stanley, American Express and GE. Also on tap will be reports from tech companies IBM, Apple, Yahoo, Intel, eBay and Microsoft. On the consumer from, Johnson & Johnson, Coca-Cola and Pepsi will weigh in with results. On the economic calendar, a series of reports on housing will likely to confirm little progress in the nation's slumping real estate market.
Mon 7/18: Halliburton, IBM
10:00 Housing Market Index
Tues 7/19: JNJ, Wells Fargo, Coca Cola, Goldman Sachs, Bank of America, Apple, Yahoo
8:30 Housing Starts
Weds 7/20: American Express, Intel, Ebay
10:00 Existing Home Sales
Thurs 7/21: AT&T, Morgan Stanley, Nokia, PepsiCo, Travelers, Mircrosoft, AMD
8:30 Weekly Claims
10:00 Philadelphia Fed Survey
10:00 FHFA House Price Index
10:00 Leading Indicators
One-Year Anniversary of Dodd-Frank financial reform bill-Consumer Financial Protection Bureau goes LIVE to celebrate!
Fri 7/22: Caterpillar, GE, McDonald's, Schlumberger, Verizon, Honeywell
Photo courtesy of The-Tim's photostream on Flickr
