Rally poised to continue if retail sales hold up

LAST week, US stock indices finished near record highs, thanks to strength in the US economy and the European Central Bank's promise of further stimulus. The rally should continue this week as long as retail sales don't disappoint.

A mixed October jobs report last Friday - jobs growth slowed but the unemployment rate dropped to a near-optimum 5.8 per cent - went against the grain of recent stats. Industrial and gross domestic product data suggest that second-quarter momentum was carried through to the third quarter. By all measures but wage inflation, the economy is booming.

Friday's retail sales data should confirm this boom. After all, the conditions for spending could hardly be better. Despite the patchy October report, jobs are more plentiful than at any time since the halcyon days of the late 1990s, consumer confidenc…