It suggests that the industrial production setback reported for June is unlikely to last and that production geared up the very next month.

consumer spending has not been dented by the hurricane-inspired rise in gasoline prices and fears of higher home heating oil bills.

The red ink was a one-month record in February, and the records are likely to continue to be broken this year. The spending side of the budget ledger remains out of control, despite some effort to constrain these expenditures.

As far as energy prices and core consumer prices, so far it is all smoke and no fire. Rising energy costs have not yet fed into the costs of other goods, despite many anecdotal signs that prices are being impacted.

I'm really more concerned that the economy is taking up slack resources. That could be a little bit worrisome. I think the Fed continues to raise rates.

Is the soft-patch bond rally over? It's a tough call, but we don't think so, as the reasons for the soft patch, rising gasoline prices at the pump, are still there.