This morning’s Retail Sales report was awful. The sour report showed that Retail Sales plunged by 2.7%, far worse than the 1.2% that was expected and even worse was when you strip out autos, the number declined 3.1% versus expectations of a 1.4% decline. Adding more pain to the report were downward revisions to the prior month’s reading. Retail sales have now fallen for six months in a row, the longest decline on record and in 2008 showed the first decline in annual sales since 1992. On the bad news Mortgage Bonds improved and Stocks lost more ground.
The banking sector is back in the spotlight as Deutsche Bank, Germany’s largest bank, warned of a fourth-quarter loss of $6.3B, mostly on the back of credit and trading losses. This has added to the selling pressure on Stocks. In other financial news, Chase announced yesterday that they are pulling out of their broker wholesale lending. This is another problem influenced by mark to market accounting.
The Fed’s Beige Book will be released this afternoon at 2:00pm ET. It is published just before the next FOMC Meeting and is used to inform the members on changes in the economy since the previous meeting. The next FOMC meeting is January 27-28, with the interest rate decision on the 28th. This report could influence the markets so stay tuned.
