@ The White House
In the morning, the President will receive the Presidential Daily Briefing, meet with Treasury Secretary Tim Geithner and meet with senior advisors in the Oval Office. These meetings are closed press. Later in the morning, the President will hold a meeting with college presidents on college affordability in the Roosevelt Room.
@ Wall Street
It was a big week for equities, as markets became more optimistic about prospects for a resolution of the Eurozone's sovereign debt crisis.
The trigger for a big rally on Wednesday was the announcement that the Fed will be providing dollar liquidity to European banks (via the ECB) more cheaply than under previous swap agreements. It is hard to treat this simply as good news ? because it says that European banks are experiencing problems getting funding through the markets. Optimism only makes sense if the swaps move is a sign that Eurozone policy-makers will follow up with action - from politicians (to move towards a fiscal union) and from the ECB (to cut interest rates much further, and to make sovereign debt purchases on a much larger scale than hitherto).
The signal from ECB President Draghi that the ECB might be able to help more if a "fiscal compact" were in place gave some credence to these hopes. But follow-through is essential, so the crucial events this week will be the ECB meeting on Thursday and the European Council meeting which concludes Friday. Markets will be looking for the central bankers and politicians to provide a credible road-map, not just more "plans to make plans".
Domestically, economic indicators have continued to improve even as indicators from overseas have worsened. This week's indicators should on balance help that mood, with the ISM non-manufacturing index likely to follow its manufacturing counterpart higher, and consumer sentiment expected to improve in early December. The trade gap might widen slightly in October, but that would still leave it well below its mid-year peak.
ISM Non-Manufacturing Index (Nov.) Both the national ISM for manufacturing and the Chicago purchasing managers reports scored more strongly than most had expected in November, and the non-manufacturing ISM survey should benefit from both. While far from robust, the economy is doing a bit better than it fared earlier in the year, and the ISM non-manufacturing index should help usher out the year with a slightly improved picture.
