While we have seen wild recession fears the last couple of days this morning the U.S data releases have been strong.
This morning retail sales were released at up .7%—against a forecast of up.3%. Taking out autos sales were up 1% against a .2% forecast.
The Philly Fed manufacturing index was at 16.8 against a forecast of 10, while the New York empire state manufacturing index was at 4.8 against a forecast of 3.
Of course by now everyone has seen the Walmart sales numbers and profits—stellar—“party on Garth” (and Walmart).
After the release of this data the 30 year treasury popped back over 2% after falling below 2% for the first time in history.
While the above may serve to sooth the markets for now we know that if we get a number of days like yesterday where the DJIA plunges it will be trumpeted across the news continually–consumer confidence can be shattered as they look at their 40lK statements and recession can become a self fulfilling prophecy. We need to watch consumer confidence numbers in the months ahead.
We fully expect markets–interest rates and equity markets to gyrate – up and down for the next week — at least.
Also we are on the watch for the redemption of many, many baby bonds and preferred stock issues as companies rush to lock in long term coupons at extraordinarily low rates. Obviously we can’t react until these redemptions happen, but we will survive, albeit at lower coupons.