Key Events This Week:

Monday:

No significant data.

1:30 ― Narayana Kocherlakota, president of the Minnesota Fed, delivers a luncheon speech to business leaders in Sioux Falls, South Dakota.

Treasury Auctions:

• 11:30 ― 3-Month Bills
• 11:30 ― 6-Month Bills
• 1:00 ― 2-Year Notes

Tuesday:

8:30 ― Revisions to third-quarter GDP are expected to boost the measure to an annualized rate of 2.4%, up from the original projection of 2%. Estimates from the 64 economists polled by Thomson Reuters range from 2% to 2.8%.

“Recent economic indicators such as business and wholesale inventories, new residential construction and net external demand point to a stronger economic activity in 3Q10 than previously estimated,” said economists at BBVA.

Forecasters at IHS Global Insight say inventory accumulation should provide a bigger boost than original estimates, while foreign trade should be less of a drag. However, private nonresidential construction should see large downward revision.

Projecting into the current quarter, IHS says to expect 2.5% growth.

10:00 ― Existing Home Sales are expected to take a slight hit in October. Forecasters expect to see an annualized pace of 4.50 million sales, down from 4.53 million in September. Estimates from 60 economists range from 4.20 to 4.80 million. The pessimism largely stems from the 1.8% drop in September’s pending home sales index, versus the consensus call for a 3% gain. The PHSI tracks contract signings, thereby anticipating secondary market sales by a month or two.

Against the consensus, economists at Nomura Global Economics look for a 1.5% increase to 4.60 million sales.

“Despite rapid growth over the past two months, the level of existing home sales remains a bit low compared to pre-federal tax credit levels,” they wrote. “We therefore think sales could rise further this month, despite the weakness in the pending home sales index (a leading indicator of existing home sales).”

On the lower end of the spectrum, economists at IHS Global Insight expect a 6% tumble.

“The Pending Home Sales Index slipped 1.8% in September, and mortgage applications to buy homes fell during October, according to the Mortgage Bankers Association,” they wrote. “The foreclosures mess which led to halts in foreclosures from some mortgage lenders contributed to the expected decline in sales.

2:00 ― Given the unprecedented attacks on the Federal Reserve in recent weeks, there should be lost of appetite to read the FOMC Minutes of the Nov. 2-3 policy meeting. The resulting communique detailed the central bank’s plan to renew quantitative easing efforts with $600 billion of new asset purchases. The minutes should detail how much support chairman Ben Bernanke had in launching the program.

“The QE2 decision is under attack from many quarters ― including from some members of the committee ― and markets have reacted violently since the meeting,” said economists at Nomura. “There is a clear need for formal communication on the latest policy action from the Fed. Indeed, the minutes of the last FOMC meeting specifically noted that the committee itself regards this document as ‘an important channel for communicating participants' views about monetary policy.’”

The minutes will also provide the Fed’s first updates on GDP, unemployment and inflation since the late June meeting.

“We expect major downward revisions to the Fed's forecasts for growth and core inflation, and an upward revision to forecasts for unemployment,” said Nomura.

Treasury Auctions:

• 11:30 ― 4-Week Bills
• 1:00 ― 5-Year Notes

Wednesday:

7:00 ― In the latest MBA Mortgage Applications survey for the week ending Nov. 12, mortgage loan application volume fell a precipitous 14.4%. Refinancings declined 16.5% to their lowest level since July; purchases fell 5%, ending a three week uptrend.

One reason for the sharp drop was a rise in interest rates. The average contract for a 30-year fixed-rate mortgage moved up to 4.46% from 4.28%.

“Rates increased sharply last week due to stronger economic data and lingering uncertainty regarding the structure and impact of the Fed’s QE2 program,” said the MBA. “Mortgage applications, particularly for refinances, dropped in response.”

Economists at Nomura note that purchase applications, despite three weeks of gain before last week’s fall, continue to languish at low levels. “This may indicate downside risks to our home sales forecasts for the next few months,” they added.

8:30 ― Durable Goods are expected to be flat in October following a 3.5% advance one month before. Forecasts are all over the place however, ranging from -2.7% to +4.5%. Not all news is bad though; the core index, defined as non-defense spending excluding aircraft, is anticipated to rise 1% after falling 0.2% in September. The discrepancy arises from September’s 105% monthly climb in non-defense aircraft parts.

Economists at Nomura, looking for a 0.5% increase overall, said October’s industrial production report signaled “very strong growth in business equipment output” and suggests a healthy underlying trend in capital expenditure ― “and therefore core durable goods orders.”

8:30 ― The October Personal Income & Outlays report is anticipated to show wages and consumption rising amid flat inflation. Economists predict income will rise 0.4%, following a 0.1% cut one month before, while consumption will pick up 0.5% after rising 0.2%. Core inflation, which excludes volatile energy and food prices, is set to be unchanged for the second month, providing the Federal Reserve with a defense of its reflationary QE2 measures.

Economists at BMTU note that year-to-year personal income began expanding in December 2009 following eleven months of decline. The growth rate was 3.1% in September.

“While that’s the best growth rate in income since late 2008, it is still about half of the historical average,” BTMU says. “Wages were up +1.7% year-over-year in September, which is the third consecutive month they’ve outpaced inflation since the recession began in December 2007.”

Forecasters at IHS Global Insight look for wages and salaries – which they call “the best guide to underlying trends” – to rise 0.5% in October.

“Higher employment, a longer working week, and increased hourly earnings all drove wages and salaries higher in October,” they said.

8:30 ― Many will be watching the Initial Jobless Claims report to see if the trend in claimants continues to fall. There were 439k and 437k new claims in the weeks ending Nov. 13 and Nov. 6, respectively, which drove the 4-week average to the lowest level since September 2008. A sustained number below 450k is generally indicative of private job growth in the US economy.

“Recent claims reports have increased our optimism about the state of the US labor market,” said economists at Nomura. “If we see another good report this week we will likely push up our forecasts for nonfarm payroll employment growth.”

10:00 ― The Reuters / U of Michigan Consumer Sentiment report bumped up 1.6 points in mid-November to 69.3. The current economic conditions index climbed 3.1 points to 79.7 and the expectations component moved up less than one point to 62.7. Revisions are expected to be minor, with analysts forecasting a 0.2 point gain to 69.5.

“The index of consumer sentiment remains quite low despite higher stock prices and improving economic conditions,” said economists at Nomura. “Given that the index was as high as 76.0 in June, we think further increases from 69.3 are quite plausible. The inflation expectation components of this report signal little risk of deflation.”

10:00 ― New Home Sales, the final bit of new data for the holiday-shortened week, is expected to show the annual pace of sales rise to 310,000 in October, from 307,000 one month before. Last month’s positive employment report provides the hope for more sales in the final quarter of 2010. Extremely low mortgage rates are also a nice incentive.

Analysts at Nomura look for the index to jump 4.2% to 320,000.

“The post-tax credit bust in new home sales looks to have ended, and building sentiment has started to pick up (albeit slowly and from a very low level),” they noted. “Given that new home sales remain quite low, we see room for further increases.”

Treasury Auctions:

• 1:00 ― 7-Year Notes

Thursday:

Happy Thanksgiving! Markets closed.

Friday:

No significant data. Markets are closing early.

Question of the Day:

Beware of Credit Card Changes 2

As I discussed last week, Credit Card Companies are blind siding us with changes that only benefit their pockets.

Minimum payments
You might have to start paying more each month.
Chase increased the minimum payment from 2% to 5% for cardholders with large balances.

Credit limits
Many card issuers are slashing credit limits despite your credit/pay history.
American Express has taken the most heat over slashing credit limits. Nearly half of its portfolio underwent a major overhaul that included cutting limits by 50% or more. Other issuers have cut limits, too, sometimes to amounts lower than the balances owed, triggering over-the-limit fees on a few accounts.
Lowering credit limits also can cause immediate damage to the credit scores of consumers who carry balances.

Rewards
Rewards programs have become less rewarding. Be sure to carefully review any "rewards programs" you are enrolled in.
What's behind the upheaval?
Why so many changes? Why now? Especially after the federal government has pumped billions into struggling banks to help bolster lending?

Consider these reasons:

A perfect storm. Banking and credit industry observers say a tsunami of financial, regulatory and economic forces is leading issuers to drive up the cost of borrowing on credit cards. The recession, financial market turmoil, the frozen credit card securities market, job losses and growing credit card payment defaults are fueling some of the changes.

Upcoming regulations. Card issuers are also gearing up for 2010, when sweeping changes in federal credit card regulations will go into effect
• Profitability problems. Moody's, a New York credit rating agency, used a stress analysis to evaluate the strength of the six biggest credit card issuers -- Bank of America, Chase, Citi, American Express, Capital One and Discover -- and found that maintaining profitability this year will be a struggle for some. The six collectively hold 80% of the nation's nearly $1 trillion in outstanding credit card balances. Can we even fathom these numbers? I sure can't!

There's a real danger in what card issuers are doing. Fewer than 10% of card users default on their payments or pay late, yet issuers are increasing rates on some of their on-time customers. These companies may be damaging the relationships with good customers they'll need for long-term growth with all of these changes.

What you can do
Read and Review all correspondence from your card issuers. It may not be easy reading, but it can have a big impact on your finances.

Talk back: Have you been hit by sneaky credit card changes? Examine your statement to see if the credit line has been lowered, if the APR (annual percentage rate) has been raised and if your minimum monthly payments have been increased.

As for those people who are closing accounts in protest of the changes, proceed with caution. You may win the battle, but you will lose the war. Closing credit card accounts can lower consumers' credit scores, especially for older accounts that demonstrate lengthy credit histories.

In addition:

Continue to use your cards, moderately. Charge something small and pay off your balance at the end of every month.

Redouble efforts to make every payment on time.

Pay down debts to build good credit scores.

Comparison shop. Good deals still exist for those with good credit.

I have Debt Settlement Plans that will help you lower your overall debt by 50%, pay off your balances in 12-36 months, and get rid of all that interest once and for all.

Sources: Connie Prater from CreditCards.com

Beware of Credit Card Changes

Have you noticed anything different about your credit card accounts lately? Read the fine print. Really read it. Chances are the interest rates have crept upward, fees have increased or rewards rates have been diluted, even if you pay your bills on time.
Many of these changes in account terms have already taken effect. Still others, such as the return of routine annual fees, may be on the horizon. Changes have come quickly in interest rates, fees, minimum payments, credit limits and rewards, and none of them favors consumers.
Interest rates:
Although banks are scooping up billions in bailout money or borrowing money from the Federal Reserve at rates as low as 0%, they aren't passing on those savings to consumers. Credit card interest rates have increased for many major card issuers and even doubled or tripled for some consumers who pay their bills on time. Bank of America is raising interest rates on about 4 million customers with balances. Citigroup and Capital One have also jacked up rates.
Credit card interest rates are typically pegged to the prime rate, which has fallen from 5.25% a year ago to 3.25% now. But the national average rate for credit cards has actually risen over that period, moving from 11.3% to 12.4%, according to the CreditCards.com's weekly rate survey of large card issuers. How is this possible and how can they get away with this?

Fees:
Card companies have become fee addicts. According to industry consultant R.K. Hammer, card issuers raked in $19 billion from penalty fees in 2008, up 5% from 2007. This year, penalty fee income is expected to rise to a record $20.5 billion. Can we even comprehend this much money?

Fees come in many forms:
• Look Out for increases in Balance transfer fees, Cash advance fees, and Foreign transaction fees. Fees that were once waived, will now be charged. So much for the banks looking out for the little guy!
Tomorrow we will learn about other sneaky tricks to take your money and what you can do about it.