How much does free money work?

The first quantification of the impact that the stimulus of free money has on a particular sector comes out at 8:30 when July Retail Sales are reported and we see how much auto sales rose. Sales are expected to rise .8% but ex auto’s they are expected to rise just .1%. Jobless Claims, also of huge importance, are expected to total 545k, down 5k from last week and would continue the downward trend and would be clean of the July seasonal distortions. Continuing Claims are also expected to fall modestly. Import prices and Business Inventories are also out today and the Treasury auctions off $15b of 30 yr bonds. An unexpected gain in Q2 GDP in Germany and France led to a drop of just .1% in Q2 GDP q/o/q in the Euro Zone. Combining this with the celebration of the continued extremely easy money policy of the Fed is leading to another strong rally in equities, fall off in bonds and the US$. China rallied less than 1% after yesterday’s sharp selloff.

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