Last week I started with “War, war, war, when will it ever start?”  I still have the same questions and I am still waiting.  Blix didn’t help the US position in his report to the Security Council of the United Nations last Friday.  But the markets did seem to like what was going on as they rallied on Friday to recover some of the recent losses.  Most don’t believe the rally has legs as there is still much uncertainty out there and that the market will stall until Iraq is resolved.

We did get good economic news as retail spending ex-auto was up in January and industrial production rose.  The Federal Reserve reported that industrial production rose 0.7 percent in January, double the gain forecasters had predicted. Business inventories tripled expectations by jumping 0.6 percent in December, according to the Commerce Department. Production rose sharply in military and space industries, in autos and in durable consumer goods like tires and televisions. Output and capacity use by utilities also grew substantially, thanks to unusually cold temperatures in the Northeast.

A survey by the National Federation of Independent Business, also released yesterday, suggested that small businesses were showing more enthusiasm for building inventories than expanding their operations.

The bad news is that U.S. consumer sentiment plunged to a 9 1/2-year low in February, in a mid-month survey that revived worries about spending.  The University of Michigan’s preliminary February consumer sentiment index fell to 79.2, its lowest since September 1993, from 82.4 in January. That was below expectations for a reading of 81.2. The index was once again dragged down by a deterioration in consumer hopes about the 12-month horizon, with the preliminary February expectations index also hitting its lowest level since September 1993 at 68.8 compared with 72.8 in January.  Confidence has been closely watched for clues on consumer spending, which as you know accounts for two-thirds of economic activity and has been keeping our economy afloat for some time now.

Investors who were coaxed into buying shares in the year’s first IPOs are paying for it. Those who invested in all three of the IPOs sold last week lost money.  The average first day return of all three IPOs, an indicator of investor sentiment toward newly public companies, was minus 3 percent. This negative trend, if it continues, would be dismal even by the depressed standards of the current IPO market.