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Consumer Data Eyed With Holiday Shopping in Full Swing

Friday's economic reports will put the spotlight on consumer attitudes and spending, as the critical, final two weeks of the holiday shopping season approach.

Retail sales for November are expected to show an increase of 0.7 percent when they are reported at 8:30 a.m. That is less than the 1.4 percent last month and includes the important Black Friday shopping day.

Also expected at 8:30 are import and export prices. At 9:55 a.m., consumer sentiment is due and at 10 a.m., business inventories will be released.

Traders were watching Thursday for news form Citigroup, which was in talks with Treasury on its tentative plans to raise capital through an equity offering in an effort to repay the TARP. Citigroup stock gained but the Standard and Poor's financial sector was down about 0.3 percent on the day.

Risk On

Stocks Thursday moved higher as the dollar wobbled and some commodities rose. The Dow was up 68 at 10,405 and the S&P 500 was up 6 at 1102. Weekly jobless claims rose more than expected to 474,000 in the past week but the continuing claims news was better than expected. A decline in the U.S. October trade deficit was also a positive.

Consumer discretionary stocks were the best performers, up 1.4 percent, followed by utilities, up 1.2 percent and health care, also up 1.2 percent. The worst performers were materials, down 0.3 percent and financials, down 0.2 percent.

Treasury prices fell as another weak auction disappointed the market. Traders said a big factor in the auction of reopened 30-year bonds was the year end, which is driving investors into shorter term vehicles. The $13 billion issue was auctioned with a yield of 4.52 percent, well above the expected range.

"It was pretty weak. Two in a row, less than stellar, so the curve is steepening," said Rick Klingman of BNP Paribas. "The background details were not so bad. There was average indirect bidders. Average bid to cover."

Klingman said most of the market's appetite is for shorter tern securities -- 2-year durations and lower. "People are just thinking the supply dynamic for next year is very poor," he said.

"You can't make too much of this auction. if you see this up again in January, then that's an issue," he said.

Dollar to Turn?

Barclays Capital strategists spoke to the press Thursday about their global outlook and one of their big themes was the risk trade. Larry Kantor, head of research, said he thinks the dollar is about to turn higher and commodities could stay firmer but they've probably seen most of their upturn.

Kantor believes that the encouraging atmosphere for financial assets will end in the first half of 2010 as investors begin to anticipate the Fed's moves to end current easy interest rate policy. The catalyst could be above trend growth.

The result would be a higher dollar and a disruption of the current trend, where risk assets, like stocks and commodities, move higher in an almost reflex move to the dollar's decline.

For stocks, "you've got to believe there'd be a generalized sell off," but he expects it to be relatively shallow.

Winterizing Your Portfolio - A CNBC Special Report
Winterizing Your Portfolio - A CNBC Special Report

Kevin Norrish, who follows commodities, said he expects commodities to be affected by the dollar's reversal but he still expects to see commodities higher. His forecast for oil is for an average $85 per barrel and the 2010 range should be $70 to $100 per barrel. He expects natural gas, however, to remain near current low prices because of oversupply. As for agricultural commodities, he expects to see some food inflation and noted that China is increasing its importation of soy beans.

Gold could backtrack, he said, but he does not expect to it go much below $950 to $1000 per troy ounce.

What Else to Watch

The House of Representatives is expected to vote on its version of the financial regulatory reform bill Friday. The Senate is far from a vote of its own, and it basically just has a proposal form Sen. Dodd at this point.

Friday is the first anniversary of the initial reports that Bernie Madoff was running a major Ponzi scheme, not just a lucky investment firm generating surprisingly consistent returns.

CNBC's Wealth in America survey, a national poll measuring consumer views and attitudes about the economy and politics will be released at 6 a.m. on CNBC and CNBC.com. The poll asks consumers about holiday spending plans.

— Questions? Comments? marketinsider@cnbc.

  • Patti Domm

    Patti Domm is CNBC Executive Editor, News, responsible for news coverage of the markets and economy.

  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

  • CNBC's Senior Personal Finance Correspondent

  • JeeYeon Park is a writer for CNBC.com. Follow her on Twitter: @JeeYeonParkCNBC

  • Rick Santelli joined CNBC Business News as an on-air editor in 1999, reporting live from the floor of the Chicago Board of Trade.

  • Senior Producer at CNBC's Breaking News Desk.