Good morning! We just got the important data for the day – and it sucked across the board. The Producer Price Index (PPI) tanked 0.4% in July, much worse than the 0.1% gain that was expected. Core PPI also dropped 0.3%, worse than the +0.2% reading that was expected. But retail sales was the big story – and it wasn’t a good one. Overall sales flat-lined in July, far worse than the 0.4% gain that was expected. Ex-auto sales fell 0.3%, compared with forecasts for a rise of 0.1%. And ex-auto, ex-gas sales dropped 0.1% against a forecasted 0.3% rise. Â
Obviously stocks haven’t cared about anything except increased QE in the U.K. and Europe lately. We’ve also seen a lot of sector rotation over the past six weeks, with “Woo hoo! The economy is booming again!” stocks leading, and “Boo! The economy is sinking!” stocks lagging. Today’s data will put that rotation to the test, however. In the early going, “pre-recession” assets are soaring, with long bond futures up 1 25/32 in price and gold reversing early losses of a few bucks to trade higher by around $10 an ounce. The dollar is also weakening somewhat after firming in the early morning hours. Since this is a Friday, it’ll be interesting to see where all these asset classes close for the week.
