Just as retailers continued to power higher yesterday, AAA said the average price of a gallon of unleaded gasoline rose to $2.76, the highest since Oct ’08. The action in retailers is similar to the action in ’05-’06 when energy prices rose coincident with the better economy and rising markets with the pain threshold of higher costs at the pump being high because of a good economy. We can be sure though that the threshold now will be much lower than back then. Fitch spoke on the sovereign debt issues and risks but said the Greek contagion risk to Portugal and Spain is not as great as the market believes. They also want the UK to speed up its budget deficit cuts. Ahead of today’s 3 yr note auction, quietly and at a glacial pace, 3 mo US LIBOR rose to a 3 month high. The NFIB small biz index fell 1.3 pts to 88, 2 pts less than expected. Those that expect a better economy fell sharply to -9% from +1%, the lowest since Mar ’09.
