While there was much sturm und drang in both the House and Senate last week, leaders from both sides of the aisle, such as John Kyl of the GOP and Democrat Dick Durbin, suggested over the weekend on the Sunday TV talk shows that a legislative compromise likely would be made—perhaps this week, since time is wasting—on extending the Bush tax cuts for all taxpayers while also extending unemployment benefits. Both the cuts and the benefits are due to expire by the end of the month. While the November jobs report on Friday disappointed, the stock market at least more than shrugged off the news of a paltry increase in jobs created and an increase to 9.8% in unemployment. The Dow closed Friday up 2.6% at 11.382, while the S&P 500 rose 3% to 1,224, and the euro strengthened against the dollar at week’s end.
During a 60 Minutes interview aired on Sunday night with Scott Pelley but which was conducted in Columbus, Ohio, on Nov. 30, Fed Chairman Ben Bernanke said it was “certainly possible” the Fed could increase if necessary its $600 billion purchase of Treasury securities under QE2, and said that he was “100%” confident in the Fed’s ability to control inflation. In addition to the domestic tax cut drama, this week will bring more meetings and possibly action in Europe on the debt and bailout front, while the domestic economic reports that may move the markets include reads on manufacturing, mortgages, trade and consumer sentiment at week’s end.
On Monday, Dec. 6, the full Senate convenes and President Obama speaks on the economy during a visit to Forsyth Technical Community College in Winston-Salem, N.C.
In Brussels, the Council of the European Union resumes talks over the 2011 EU budget in advance of the EU Budgets Committee meeting on Wednesday; the Ireland bailout and European pensions are also on the agenda.
On Tuesday, Dec. 7, the full House should convene; it is scheduled to be in session throughout the week. In the Senate, Sen. Chris Dodds’ Banking, Housing and Urban Affairs Committee meets in the afternoon to consider the state of the credit union industry. The Federal Reserve releases its monthly G19 report on the state of consumer credit.