(AP Photo/K Jebreili) construction site in Dubai, U.A.E.
Last week's surprise news that Dubai World may default on $60 billion in debt sent shock waves through financial capitals around the world. Most analysts anticipate some type of restructuring will occur and any fresh reports are likely to compete with much-anticipated results from Black Friday and the upcoming employment report out at week's end.
It appears that most US institutions do not hold much paper from the troubled-Middle Eastern company. And measures of risk in the capital markets, including LIBOR, swap rates, and the TED spread, were little changed.
However, the Dubai situation provides a chilling reminder that the trillions in stimulus pumped in by governments and central banks has served to stabilize the global economy but not eliminate the risks brought on by excess speculation.
Meanwhile, Wall Street will be looking carefully at how retailers performed on Black Friday. Anecdotal reports show crowds have been large as consumers snapped up $200 laptops and $300 large-screen TVs. The question on many minds is whether shoppers also purchased full-priced accessories or focused mainly on the deals that are likely to hinder profit margins.
Even if overall sales are viewed as a success versus a year ago, one day and one weekend does not make an entire holiday shopping season. Many outlets still face headwinds from stagnant consumer confidence (see chart), rising unemployment, and a public that has taken on a renewed interest in savings and debt repayment.
Elsewhere, Friday's jobs report will also garner plenty of attention as policymakers, politicians, and traders await signs that the nascent economic recovery is starting to encourage companies to once again consider new staff.
Nonfarm payrolls, which had been declining at a diminishing pace for much of the year, has showed no progress over the past three months (see chart). But the recent downward trend in weekly initial jobless claims has raised hopes that November's report will show some improvement.
For a look at major issues impacting the economy, please see Tomorrow's Economy Today.
Comments