It was a quite week for economic news. The services sector did report solid growth in September, and employers are still holding on tightly to employees. Overseas, business activity reports remained much the same at generally solid levels. The S&P 500 ended the week at 1.15% with Foreign Developed at -0.54% and Emerging Markets at 0.03%. In the US, Large Caps bested Small Caps, which were negative, and Value beat Growth, which was driven by a rally in defensive value sectors and a fractional loss in technology. Treasury yields declined marginally which led to comparable positive fractional returns for Interest, Blend and Credit. The Dollar rallied again, which helped Global Bonds to underperform US Bonds. Commodities were broadly ... (click for more)

The real economy is defying consumer sentiment. The manufacturing sector’s growth is accelerating at a strong level. The services sector’s growth is also accelerating at a strong level. The August Jobs Report showed 162,000 new jobs; when adjusted for upward revisions to the prior two months’ reported jobs, the number is a very strong 217,000 new jobs. In watching “what they do, not what they say”, August Core Retail Sales came in at a very strong 5.6% versus 4.7% the prior month, year over year. However, inflation is driving the headlines and market sentiment. While energy costs are the obvious culprit, August Core CPI and Core PCE Price Index declined to 2.4% and 2.7% (adjusted for prior month’s revision), respectively, suggesting underlying inflation is moving...... (click for more)