Take out food and energy costs and retail prices rose just 0.2 percent, a finding that soothed the frayed nerves of the bond market today, with the yield down to 6.14 percent on the ten-year Treasury note. The Chairman of the Federal Reserve gives Congress an assessment of the economy later this week, and Bruce Steinberg, chief economist at Merrill Lynch, believes the economy's cooled just enough to keep Mr. Greenspan happy. I don't think Greenspan will come out and say that on Thursday. I think he'll continue to express caution about the environment, but the economy has slowed down. I think the Fed has successfully engineered a soft landing.
Inflation remains muted.
Probably, they're done. The Nasdaq Composite took a big hit today, a drop of 2.3 percent, but that was ahead of some profits reports from some key high-tech companies. More on that in a few minutes. For now, the generally strong economy continues to fill government coffers to overflowing. Rising budget surplus numbers make it easier for Republicans to argue the Treasury can afford tax cuts.