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The Numbers Story

June 14, 2012 – 5:04 pm

Inflation is so low that deflation is more of a threat and the weekly unemployment claims rose again for the 5th time in 6 weeks. Yesterday the retail sales report showed weakness last month but most of it came from lower gas prices at the pump which in the long run is a good problem to have for consumers. Another positive for consumers is the lack of inflation. Both issues puts more money in the consumer’s pocket for them to spend on other things.

Our economy is 70% driven by the consumer and we need them to spend to keep it going. That is very difficult to do when unemployment is high and jobs are not being created in any significant way.

The data in recent weeks and months clearly demonstrate a weak but still growing U.S. economy that is reflected around the world. Many countries have begun stimulus efforts. Meanwhile Europe is in recession, but even they are talking about stimulus in addition to austerity.

Here in the U.S. with operation ‘twist’, a successful effort by our Federal Reserve to push down interest rates coming to an end this month, the market is waiting to see if a new effort from the Fed will replace it. The data is clearly giving our central bank a free hand to do whatever it deems necessary. QE3 is definitely on the table.

Good Trading
Steve Peasley

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