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Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Wednesday, March 13, 2013

Just In The Nick Of Time

The very broad measure of US business sales turned down for the month of Jan. and the
level of total business inventories shot up. That is classic early bad news. Viewed yr/yr,
business sales were up 2.9% in current $ and about 1.3% real. The Fed damn near lost
its gamble by holding off on further QE for a good 15 months. Fortunately, retail sales
did pick up strongly in Feb. and accelerated back up to 4.7% yr/yr, partly reflecting
strong, but temporary income growth near the end of 2012. My forward looking economic
indicators do suggest a couple of months of stronger business ahead, particularly in view
of the sharp recent improvement in goods and services new order rates from the purchasing
managers' reports. However, my weekly indicators have been on the flat side since late
Jan., so we need to see more positive follow through here.

Now, the broad business sales report for Jan. was a negative indicator for earnings
momentum. We'll get a more current reading on this score from Feb. production and inflation
data out soon. Through Jan. there was low production growth yr/yr and a continuing
deceleration of pricing power.

It is perhaps noteworthy that the large pick-up in retail sales reported today was a "yawner"
for the stock market. Experienced traders know that retail sales is a volatile series, but it
also shows that a good number may have been needed to hold the market after the recent
strong run-up.

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