The Dow Jones trades near record highs this week and the economic calendar will show us if US consumers are shying away with soaring inflation.
Tomorrow brings retail sales for the US economy with a 1.1% gain expected for October, up from 0.7% in the previous month. The US also sees the release of industrial production with a bounce to 0.7% expected from -1.3%.
For the retail sales figures, there is a fear that recent inflationary pressures will see consumers shy away from discretionary purposes. This will make for an important reading with Black Friday and Thanksgiving up ahead. If consumers are seen to be retracting with inflation than that will hit the economy into year-end and it will have even more bearing because traders are not seeing the Federal Reserve take action on rising prices.
Markets have been buoyed by the progress of the Biden spending package but it is a repeat of the liquidity that has fueled the current problems. Many investors are turning a blind eye to inflation that is now at levels not seen since the 1980s-90s. That is a real problem with the debt loads that governments now have.
Dow Price Analysis
The Dow Jones rallied strongly from the October lows and that was always likely with the doomsday talk of a market crash that seemed to dominate financial news outlets. The price moved above the all-time highs and has stretched further. We can see that price is also treading a resistance level which brings in highs from May and August so this is an important week. The price moved higher on Monday but a dip below Thursday’s support could signal another correction.