Unlike last week there are a number of economic reports that will draw attention; no Treasury borrowing but on Thursday treasury will announce the following week's borrowing, 2 yr notes, 5 yr notes and 7 yr notes will be sold. Wednesday Jan housing starts and permits, starts will likely be up while we expect permits to have declined after a big jump in Dec. Most of the economic data this week will be on the manufacturing and business sectors with industrial production and factory use for Jan and the key Philadelphia Fed business index expected to be a little better. Interest rate remain tethered to a narrow range for mortgages, moving in a 10 basis point yield range; all focus is on the equity markets with a growing outlook of a major correction coming. That said, the equity markets have been looking for a correction for the past month but so far nothing; a day or two of selling then a day or two of rallies keeping the key indexes from and serious declines. It is overdue, we expect the stock market will deliver a huge decline but as long as traders see any decline as a buying opportunity no big sell-off is likely.
