Courtesy of our Federal Reserve

Today we will finally get some data in the U.S., with the release of retail sales, business inventories, and the monthly budget statement. We will also get to read the minutes of the Sept 23 FOMC meeting this afternoon.

Retail sales is the number to watch, and it is expected to have dropped by over 2% with the end of the “cash for clunkers” program. If the data comes in as expected, it will confirm the U.S. consumer will not be able to sustain their spending as the government stimulus fades.

So while Europe and China look to be expanding, the U.S. is bogged down with rising unemployment and weak growth. (Surprise, surprise.)

I can pretty much predict what the administration will say after seeing the report: It’s obvious we need to have another stimulus package!

The administration thinks the way out of this mess is to borrow and spend, and if the U.S. consumers won’t do it on their own, the government will be more than happy to spend our money for us.

But President Obama’s effort to spend us out of recession is undermining the U.S. dollar. In spite of his pledge to keep the dollar strong, the dollar index is down 10% during the first 8 1/2 months of Treasury Secretary Tim Geithner’s term.

I read the following quote in an article on Bloomberg which I thought was dead on, “The all night printing runs at the Treasury are chipping away at the dollar’s ability to hold value compared to other currencies and commodities,” Mike Sander, of Sander Capital said yesterday.

“With dollar weakness, inflation fears, a huge budget deficit, energy prices creeping up, metals such as gold, silver, and copper will be pushed up in price.”

I’d have to agree…

That’s it for today. Have a Wonderful Wednesday!
Chris Gaffney, CFA, VP
EverBank WorldMarkets