Week in Review: Markets await Irish aid package

U.S. economic news

Inflation at lowest level since 1957
Two key inflation gauges showed muted price movements in October. The U.S. Department of Labor reported that the seasonally-adjusted consumer price index (CPI) rose 0.2% from September and 1.2% from October 2009. The core inflation rate excluding food and energy prices was unchanged from September and rose 0.6% from a year earlier.

Meanwhile, wholesale prices remained under control. The Producer Price Index (PPI), which measures how much manufacturers pay for goods and services, rose a seasonally adjusted 0.4% for finished goods in October from September, and 4.3% from a year ago. However, the core index, without food and energy prices included, declined 0.6% last month, in its sharpest monthly drop in four years. The core index was up just 1.5% year over year.


Retail sales rise 1.2%
U.S. consumers appeared to be loosening their purse strings, as retail sales increased 1.2% in October, the fourth consecutive month of rising spending and the largest monthly increase since March. Retail sales risen to their highest level since August 2008.


Fed to require bank capital plans
All 19 banks that went through stress tests in early 2009 will have to submit capital plans to the Fed early next year to demonstrate their ability to withstand losses. This initiative is part of the Fed's efforts to bolster bank supervision in the wake of the financial crisis and make sure large banks are on solid financial ground.


U.S. mortgage delinquencies decline
The rate of U.S. mortgage delinquencies fell in the third quarter of 2010, though still remained quite high. According to the Mortgage Bankers Association, the delinquency rate on single-family homes fell to 9.13%, a drop of 0.72 percentage points. The percentage of loans in foreclosure proceedings fell to 4.39% from 4.57%.


U.S. jobless claims rise slightly
The number of U.S. workers filing first-time claims for unemployment insurance rose 2,000 to 439,000 in the week ended November 13, the U.S. Department of Labor reported. Meanwhile, the four-week moving average of initial claims fell 4,000 to 443,000, its lowest level since September 2008.

U.S. and global corporate news

GM revs up finances with IPO
In the second largest U.S. initial public offering ever, General Motors raised $15.8 billion through common shares in its offering, selling 478 million shares at $33 per share, a higher-than-expected price. Counting additional shares that underwriters may exercise their right to sell, the total common stock sale could reach $18.1 billion. GM also raised $4.35 billion in preferred shares as the automaker sought to re-establish its financial independence after being bailed out by the federal government last year.


Big box stores in the black
A number of high-profile large companies posted third-quarter profits. Wal-Mart's third-quarter earnings climbed 9.3% on strong international operations, but same-store sales in the U.S. fell for the sixth consecutive quarter, reflecting tight spending by low-income earners.


Home Depot's earnings jumped 21% as cost controls and share repurchases offset the impact of the weak U.S. economy. The home improvement retailer also boosted its profit expectations for the year. Competing firm Lowe's also reported rising profits, with earnings up 17% after reduced discounts and increased sales of private-label profits helped offset a shortfall in overall sales. In contrast to Home Depot, Lowe's reduced its full-year outlook.


Sears loss widens while Penney's profit soars
Sears Holdings' third-quarter loss grew as sales fell substantially and the retailer continued to lose business to rivals. Comparable-store sales at Sears' namesake stores declined by 8.2% while the company's Kmart stores comparable-store sales fell just 0.7%, leading to a small profit within the division. In contrast, J.C.Penney's third-quarter earnings rose 63% under improving sales conditions. However, the retailer's inventory rose 6.2% from a year ago, and its gross margin, which indicates profitability, fell slightly.

Global economic news

Irish economic rescue package imminent
The Irish government, despite its distaste for depending on foreign financing, indicated that it would accept an international bailout to rescue its troubled banking industry. Late in the week, the government was negotiating a loan package with the IMF and European Union. Details of the loan, reportedly in the tens of billions of euros, were still being finalized. The Central Bank of Ireland said Friday that largely technical discussions with international delegations would continue for days to come.


China acts to curb inflation
The Chinese government made two decisive moves to counter inflation this week, with China's State Council announcing Wednesday that it would limit price increases on a wide range of products, including grain, oil, sugar and cotton. On Friday, China increased bank reserve requirements for the second time in two weeks, essentially withdrawing cash from the banking system. Last week, official data showed China's consumer price index rose 4.4% year over year in October, its fastest pace in two years and above the targeted 3% inflation rate for 2010.


Spanish economy stalls; bond sales ease fears
Spain's economy continued to struggle in the third quarter, as its gross domestic product remained unchanged from the previous quarter and up just 0.3% from a year earlier, according to the country's National Statistics Institute. Sales of close to $5 billion (3.65 billion euros) of long-term bonds on Thursday paid higher yields than two months ago, resulting in a higher level of confidence in the country's weak economy and troubled banking sector.


Germany's economic indicators are positive
German economic expectations rose more than expected in November. A closely watched economic-expectations index increased to 1.8 points in November from -7.2 points in October. The increase followed six consecutive months of decline. Additionally, a Centre for European Economic Research survey of analysts and institutional investors jumped 8.9 points to 82.5 points.


Eurozone inflation rises
Inflation in the 16 countries that use the euro climbed at the fastest rate in almost two years in October. Eurostat reported that consumer prices rose by 0.4% from September to October, and by 1.9% from a year earlier. The core rate of inflation excluding the prices for food and energy stood at 1.1% in October.

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Sources: MFS research; The Wall Street Journal; The Wall Street Journal Online; Bloomberg News; Financial Times; Forbes.com; CNNMoney.com; msnbc.com