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This Week's Business News

Retail Sales

Retail sales rose 1.4% in May. That's more than double the gain projected by Wall Street analysts.

Beige Book

The Federal Reserve reported the economy grew in May in all 12 of its geographic Districts.

Jobless Claims

The four-week moving average of initial claims for jobless benefits -- i.e., layoffs -- now stands at 311,000. To put that into perspective back in mid-June 1997 that figure was 325,000.

That's true -- more people were being laid off from their jobs 10 years ago when compared to today. That's despite the fact over 16 million more people currently are employed.

Consumer Inflation

Total consumer inflation in May rose 0.7%. That follows a 0.4% gain in April.

Those are not the greatest numbers. Now, mind you, they're not horrible. This ain't 1977. But still there is material inflation in the system.

* * *


Although the financial media, Wall Street, and even the Federal Reserve prefer to focus on so-called 'core' inflation, in my view that's like doing a Beatles anthology sans Sgt. Pepper's.

Wall Street severely is underestimating inflation realities and the concomitant prospect of Federal Reserve rate increases over the next 9-12 months.

There's a material chance of a massive stock market sell-off later this year. Presumably not along the lines of 1987. But perhaps a 1998 or 2002-style correction.

That would, of course, be a good thing. A good thing, that is, for any long-term investor.

Stock market crashes and serious corrections are the best news possible for long-term buyers of stocks and equity mutual funds.

Buy low. Sell high. Not vice-versa.

* * *

Data Sources: Census Bureau, Federal Reserve, Dept. of Labor.

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