Steve Blitz Morning Notes

A quick glance at what the Fed calls "control retail sales", sales ex autos, auto parts, gasoline stations, and building supply stores, shows a picture of why Bernanke and others suggest that the economy is show some signs of stabilizing.



To me, stabilization means the data turn positive. There is enough volatility in the data that the rate of change of the rate of change will give a lot of false reads. Even though the sharpest contraction in the economy does appear to be past, the economic risk going forward is that we are shifting from a liquidity crisis to a solvency crisis -- the full impact of the contraction in the nonfinancial sector has yet to be felt. The economy might not contract at quite the same pace, but it can still contract all the same.