Retail sales out this morning came in slightly below consensus, but it is still impressive for several components many of which got a boost from replacement-driven demand in the aftermath of Hurricanes Harvey and Irma.

I continue to believe, however, demand is more than just replacement.  The glaring worry is furniture, which had been going great for a long time, while the rebound in Internet (grew more than 2 times year to year gain of overall retail) stands out. 

Then there’s consumer sentiment which surged to its highest level since 2004.  More impressive was the 19% jump in the index of consumer expectations.  People feeling better about the future carries a self-fulfilling aspect.

Early into the new earnings season, its clear financials aren’t going to lead the parade, but the reemergence of high flying tech is enough to fill the leadership void.

I like that retail stocks are higher.  As its two-thirds of the economy, its critical sentiment becomes action, and judging from the soft data and the rebound in retail stocks, this could be the wind that carries the rally into 2018.

Have a good weekend.