By Evelina M. Tainer, Chief Economist, Econoday
11/16/01

Production declined for the 13th straight month in October and the chances of another drop in November are a virtual certainty. In contrast, retail sales rebounded sharply in October spurred by a surge in motor vehicle sales. Inflation remains under wraps. Despite the production slump, market players have decided that a recovery will soon begin and that Fed rate cuts are pretty much behind us. Consequently, equity prices jumped this week while bond prices slumped (boosting yields).