Tuesday, November 16, 2010 – my comments are in italics

Retail sales rose 1.2% in October, a surprisingly strong result well in excess of the consensus
0.7% forecast. Consumer spending has surprised to the high side for three consecutive months
Consumer spending will be revised up a tenth or two in the third quarter and is on course to be better in
the fourth quarter. The pick-up in consumption is not enough to materially change the economic
outlook; the economy is still growing too slowly to make a dent in the unemployment rate. But it is
enough to keep the expansion alive despite an impending slowdown in inventory investment. – FTN
Financial – somehow the chart below is making new all time highs. Other retail sales measures (total
retail sales, total less food, total less autos, etc.) are close to previous highs, but not making new highs.

Total Retail Sales Less Autos and Gas Stations

Banks may agree to a settlement of the foreclosure issue worth ~$1B in the next month – Fox
California saw “decent demand” (but not overwhelming demand) on Mon as the state started to
market a $10B muni deal (the state sold about 44% of the $10B to retail investors in its first day). The
real test will come though when CA tries to sell $2B worth of longer-term BABs. California will be selling
~$14B in total over the next two weeks. WSJ/FT – a lot of muni debt will hit the market before year end
Because of the nature of American business today, a weaker US$ may not do much for exports
and therefore may not stimulate the US economy all that much – NYT
Fed’s dual mandate under attack – Mike Pence, chairman of the House Republican Conf, on Mon
said he planned to introduce a bill that would end the Fed’s dual mandate on unemployment and
inflation and force it to concentrate solely on prices – FT – this is essentially how the ECB operates.
 Treasury 30-year bond yields rose to the highest level since May as a report showed retail sales
increased, a group urged the Federal Reserve to halt purchases of bonds because it may risk a surge in
inflation, and Moody's critiqued a presidential commission's deficit-reduction plan. – Bloomberg

30 Year Treasury yields