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The street applauded this number and bond yields soared. The market initially sold off as bond yields hit 4.83%, a new cycle high. Stocks were down as much as 1.5% before recovering all their losses by lunchtime. I think the retail sales number confirms the strength of the 3rd quarter. Optimism for earnings is currently outweighing higher interest rates.

In reality, the increase in sales for the past year has been all about inflation. Real sales are unchanged from last year but are trending in the right direction. I don’t expect October to be as good a print, but if we continue in the right direction November and December will not be as bad as some think.

Looking across categories it seems like people did some quick shopping online before going out to buy a used car as prices have come down some. They drove off the lot and straight to the auto parts store to slightly upgrade the vehicle. Then they drove to the mall and bought 3 new pairs of socks to replace their holey ones. Leaving the mall, they picked up a bottle of wine at the local beverage depot and take out from their favorite Thai restaurant. They filled up their gas tank on the way home and also stopped in the grocery store for a pint of ice cream and some popcorn.

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