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Fits and Starts

February 18, 2010 – 11:30 am

The report this morning of weekly unemployment claims jumped unexpectedly which demonstrates the weakness of the economic recovery. Jobs have not started to return and likely won’t for some time. It will be a slow process and will feel like a jobless recovery. The job market is improving but at such a glacial rate no one is going to be happy about it.

Wholesale inflation numbers reported this morning also jumped. January’s number was up 1.4% but core inflation which excludes food and energy was up only .3%. The problem is that both numbers were above expectations.

We will see retail inflation numbers tomorrow. I have a feeling that the producers might be experiencing inflation but they are going to have a hard time passing it along to the consumers. The economy is just too weak at this point to absorb price increases.

It may not feel like it but the economy is gaining strength and will likely continue to do so throughout most of this year. The stock market will realize this and will rise, just do not expect it to be in a straight line or expect it to be like last year’s rally. The rally is going to be much more muted this year.

Good Trading
Steve Peasley

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