Despite disappointing data the major averages struggled into the final hour mixed to begin the week.
Retail sales missed expectations substantially gaining just .1% in September. A second consecutive weak month for retail sales. The declines were broad based with restaurants and gasoline stations both reporting sales reductions for the month.
The New York Fed regional index advanced 2.1 points in October to 21.1. New orders jumped, employment slipped. Price data fell to a nearly 1-year low.
One of the real fears, based on modern economic theory, is that substantial money printing to buy assets, AKA Quantitative Easing, would spur inflation and currency debasement ala Germany’s Weimar Republic and more recently Zimbabwe. I always figured that Japan would be the Canary in the coal mine on this one as their debt to GDP ratio is a developed country record high north of 230%. The Japanese have also monetized about 50% of their debt and 30% of their stock market. Yet the country remains plagued with deflation, or price declines, nearly 30-years after their great early 90’s credit fueled bust. While their currency the Yen holds its value and laughs at economic theory. Moving to western developed economies and the reinflation of various asset bubbles in the post crisis period since 2009, has been very successful. The real question is of course will these prices hold, and can they grind higher. Economic theory and data analysis say it’s not permanent, and yet here we are.
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