Consumer confidence on the other hand, is getting drastically worse. The anticipated reading of 54 would be the third-lowest reading of the year, and a 10 percent drop from last month. The expected drop this month would reverse the recent trend of increased readings. We still wouldn’t be near our lowest reading of the year which occurred in June (50.4), but looking back over the last 12 months, it is quite startling to see that the October 2007 reading was 95.6.

The advanced GDP figure for Q3 is announced Thursday, and it looks like we will be seeing a contraction compared to last quarter. This advanced reading is likely to show a 0.10 percent decline, but with all the revisions it goes through before we get the final GDP number, I would expect it to become a larger decline by the time the final number is announced down the road.

The Personal Spending report for September comes out on Friday, and just in time for a frightful Halloween, we are expected to show a negative number. Without consumers opening up the wallets and spending money, I don’t see how we are going to pull out of this market. Perhaps a second round of economic stimulus checks will prop up this number in the next few months if the plan comes to pass. If not, outside of a Christmas miracle, this number could get much worse before it gets better.

The big event of the week is the FOMC Policy Statement on Wednesday. Depending on what the Fed decides to do, it could either provide a short-term bounce for the market, or send it tumbling further down to re-test the lows of 2002-2003.  Probabilities are all over the board with cuts from 25 basis points to 75 basis points looking like a very real possibility.

Earnings Calendar:
Monday: VZ
Tuesday: CEPH
Wednesday: GRMN, KFT, PG
Thursday: XOM, JAVA
Friday: CVX

Source: Halloween Isn’t The Only Scary Thing This Week