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Data Everywhere

June 15, 2011 – 5:15 pm

This, as predicted, has been a volatile week with the massive amount of economic data hitting the markets. Yesterday the data looked positive, especially the retail sales numbers. The number was weaker than the month before but much better than expected. Most of the weakness came from the auto industry as expected as that sector recovers from the supply chain disruptions from Japan. That pushed stock prices up sharply.

That was yesterday. Today the Empire State Index for June showed a slowdown in the New York area in manufacturing. That was a big disappointment and the stock market reacted to it. It didn’t help that a builder survey came in at a 9 month low. That pushed stock prices down.

The inflation numbers this week showed some price increases in autos offset by food and oil decreases. Still inflation came in a little higher on the consumer side and flat on the wholesale side.

The weak economy and slight increase of inflation spells stagflation but it is far too early to expect that. Oil prices are still falling and weakening economies around the world should take some pressure off price increases. In the U.S. The weak job market should mean that inflation cannot spin out of control. However, inflation could stay higher than economic growth and that is stagflation.

We have more data to come this week and as it is option expiration week volatility should stay with us.

Good Trading
Steve Peasley

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