What a Week: Feeling Groovy

Just as HCA(HCA Quote) and Freescale Semiconductor(FSL Quote) successfully completed bond offerings to finance their jumbo leveraged buyouts, the next big deal rolled onto the calendar. Clear Channel Communications(CCU Quote) announced it agreed to be taken private for $18.7 billion by a group of investors including Thomas H. Lee Partners and Bain Capital.

In the big M&A news of the week, US Airways (LCC Quote) proposed an unsolicited $8 billion merger with bankrupt Delta Air Lines (DALRQ Quote) on Wednesday, spurring big moves across the airline sector. Airlines also benefited from a drop in crude prices, which settled Friday at a 17-month low of $55.81 per barrel, down 6.35% on the week. For the week, the Dow Transports rose 2.4%.

Crude's fall added to a benign economic environment for stocks. The Fed was certainly relieved to find the core producer price index and the core consumer price index came in below consensus expectations, while retail sales declined, but less than expected. The labor market remains tight, as initial jobless claims dropped, while industrial production and manufacturing found its footing -- as evidenced by healthy Philadelphia and N.Y. Empire business activity surveys.

The data helped overcome the sting of the minutes of the October FOMC meeting, which revealed "all meeting participants expressed concern about the outlook for inflation." The economic news also vindicated the Fed's decision in June to hold the fed funds rate steady in order to allow the economy to slow, bring down inflation, and to keep a close eye on the housing market.