Yesterday’s weak Consumer Confidence report has many worried that the consumer is still down in the dumps. If so, no one has told the consumer sectors of the stocks market. As shown below, the S&P 500 Retail sector actually made a new bull market high today. The S&P 500 still has a ways to go to get back to new highs. While the Consumer Confidence report is indicating a weak consumer, the market still seems to be predicting strength from the consumer. If it weren’t for groups like retail, the overall market would be doing worse.

With the fiscal stimulus, and the requirement of humans to consume, the pure rate of interest, has indicated that retail is more profitable than higher stages of production. Quite rationally, investors have bid-up retail based stocks. This is a sign, clearly visiable, of inflation.