@ The White House
In the morning, the President will receive the Presidential Daily Briefing in the Oval Office. The President will then meet with senior advisors. These meetings are closed press.
@ Wall Street
Euphoria over the Eurozone fiscal compact was dampened when German Chancellor Merkel and European Central Bank President Draghi once again ruled out unlimited ECB sovereign bond purchases or an expansion of the stability fund. Meanwhile, major European banks were hit with a one-two punch of a dollar-funding crunch and credit downgrades.
The Fed?s decision to hold steady on policy made matters worse, as markets were looking for reassurance that the Fed stands ready to intervene if the Eurozone situation deteriorates and reaches US shores. However, benign inflation readings later in the week raised hopes that the Fed would have wiggle room to stimulate further if conditions warrant it.
Retail sales expanded in November, but at the slowest pace since June. Still, consumers are staying in the game. Manufacturing output softened in November after a string of blockbuster months. But the regional Empire State and Philadelphia Fed Manufacturing Surveys portended a return to expansion in December.
This week brings data on housing starts and existing and new home sales, consumer sentiment, durable goods orders, and monthly personal income and consumption. November likely saw very mild gains in housing starts and sales. Builders remain cautious about adding new inventory into a weak-demand environment and causing home prices to fall further.
Improved job market prospects and lower oil prices likely boosted the Reuters/University of Michigan Consumer Sentiment index in a late-December update. Durables goods orders likely jumped in November thanks to a deluge of aircraft orders, but with little strength elsewhere.
Consumers likely saw their incomes grow at a slower pace in November while spending was boosted modestly by gains in autos and services. Core PCE inflation should be tame, with year-on-year comparisons firmly below 2%.
