Just in the past week or so, chances of a Fed December rate hike went from a coin toss to over 80%! Last Monday, U.S. Treasury bond yields climbed to over 3.13% from just under 3% the Friday before! That’s a rise of over 4.5% in a couple days.

Stock prices have moved lower over the past couple days but are still stubbornly close to all-time highs.

The Dent Research investment committee (Harry, Rodney and the gang) met Thursday and we all arrived at the same conclusion: a lot of stocks within the major stock indices are getting creamed, but a few large glamor names are propping up the overall market. Some of those include Google, Netflix and Amazon.

So, lower earnings, revenues and outlooks are affecting individual stocks but not the overall markets… yet.

But as we’ve been writing about for months, the overall economy isn’t all that rosy.

Poor reported earnings over the last quarter is a direct reflection of a poor economy. If corporate earnings are lower, worker paychecks aren’t going up, price aren’t rising, and consumers are probably not spending more.

And guess what? Last month they didn’t spend as much as analysts expected. After no growth in September, October retail sales ended up only 0.1%. Excluding auto sales, they were up just 0.2%, well below estimates (though according to retailers, unseasonably warm weather was the culprit). Friday we saw more even evidence of our shaky situation as producer prices fell again. The October headline number was negative and down 1.6% for the year!

That’s deflation, folks!

If you exclude food and energy, we are up 0.1% in inflation for the year. That isn’t anywhere close to the 2% target the Fed is looking for and could change their mind about hiking, leaving investors even more confused.

Long-term Treasury bond rates did pull back Friday and yesterday after the above reports, along with another shaky manufacturing survey (Empire State). And to pile on more uncertainty, just add in the Paris terrorist attacks!

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