Yes, the Government stimulus checks are hitting mailboxes from coast to coast in the hope that everybody will rush out and buy non essential items. The retail industry has been suffering from the recession… yes, the recession. The recession that many in the media claim will never happen.

The market has been trading on the premise that the economy will rebound starting in the second quarter of this year and retail sales would jump right back up again. But, as we know from trend analysis, the discretionary spending has been trending downward for  many years. Now we are faced with a recession of the likes not seen in many decades. The collapse of the housing bubble has removed the one last source of income people have to tap. And that is becoming evident in the ominous credit statistics released last week. Debt being put onto credit cards has risen at a rate that is similar to the decline in the housing market. Does not take a rocket scientist to see the connection here. Declines in the housing ATM machine have led to buying for more and more essentials on credit cards. And at a time when banks are already experiencing rising defaults on consumer loans. And rapidly rising inflation.

So where is that big fat check (cough cough) going to go? Paying for food and gasoline is what. So much for the $160 Billion dollar stimulus package, it will just get burned up in the gas tanks all across America. Where does this leave the retailers who were anxious to see customers come in any buy TV’s, iPods, fashion clothes, etc.? It leaves them right where they started, waiting.

Rising inflation, (you know, the inflation that the Federal Reserve had been saying for months is "contained") is creating a squeeze on the average consumers that more and more are unable to keep up with. Banks have substantially reduced the amount of loans they are providing, further cutting people off from much need money. Even credit cards are being cut down with credit limits being lowered and interest rates raised. Where does the average consumer get a break? No where. But, the Government is telling the American people that growth will return and the fundamentals of the economy are sound. Both statements could not be any further from the truth. My observations suggest to me that the 2nd quarter is going to be worse for the retail sector, which will bring down the economy further as 71% of the nations GDP is dependent on the consumer.

Friday afternoon Federal Express (FDX) cut their earnings forecast citing rising fuel and weak shipping demand. I underlined the weak shipping demand part because the media is not discussing this. They are focused on talking about the rising cost of fuel hurting the big shipping giant. But, the company said that they are experiencing lower demand for domestic express shipments and less then truckload freight services. This should be what the media highlights the most, not just the fuel costs. Lower demand for shipping services means less people buying goods and less shipping by corporations as their sales slow.

The recession that the media says will never happen sure is getting here in a hurry.

Events for this week:

Monday

9:15 am : Fed member Evans speaks on the economy in Illinois

2:00 pm : April Budget Statement  (last $177.7B)

7:15 pm: Fed member Lockhart speaks about financial markets

Earnings:

Before the Open: KDE, ARQL, BKUNA, BLG, CNTY, CHTR, CDE, CODI, CRYP, DTG, DHT, EMAG, EMMS, EVR, GNA, GTXI, HL, HOC, HWCC, IMAX, IPSU, IMB, VTIV, ISIS, JASO, JRT, KNOL, MBI, MED, NNI, NUHC, ORBK, OHB, PEIX, PWRD, PETS, PMI, RDN, RADN, S, SPF, TTI, TRGL, VAL, XOMA.

After the Close: BYI, BWY, CTLM, CBAK, CLWR, COGT, CUZ, DTSI, DXPE, FLR, KNXA, LDK, MDR, MIVA, NMSS, NUAN, PROS, PGIC, TWTC, WRNC, WSPI, XFML, ZOLT.

Tuesday

6:10 am : Fed member Pianalto speaks on monetary policy in Paris

7:45 am : ICSC/UBSW chain store sales

8:20 am : FOMC Ben Bernanke speaks on liquidity measures

8:30 am : April Import Price Index (last m/m 2.8%, y/y 14.8%)

8:30 am : April advance retail sales

9:15 am : Fed member Warsh moderates discussion on Sarbanes-Oxley Act

10:00 am : May March Business Inventories (last 0.6%)

11:00 am : Fed member Plosser moderates discussion on fair disclosure

1:00 pm : Fed member Yellen speaks on US economic outlook

1:00 pm : Fed member Hoenig speaks on US economic outlook

1:30: pm : Fed member Fisher speaks about the Fed and the economy

8:00 pm : Fed member Evans speaks about the economy

Earnings:

Before the Open: CCJ, CSIQ, LNG, CFSG, COMV, DISH, ESLT, FSRV, FOSL, FNDT, GIGM, GLUU, HELE, HOKU, IAG, IGLD, KEM, LIZ, SENO, SIRI, TJX, VSE, WMT.

After the Close: AMAT, CALL, CVLT, CHCI, DIET, ERTS, FLML, GXDX, GIVN, HI, HRC, HMIN, PODD, MELI, MRGE, OPNT, PAAS, PLAB, WFMI.

Wednesday

7:00 am : MBA mortgage applications

8:30 am : April CPI (last m/m 0.3%, y/y 4.0%)

8:30 am : Fed member Rosengren speaks at Boston conference

9:15 am : Fed member Kroszner speaks at Boston conference

10:30 am : Crude Oil inventories

12:00 pm : Fed member Lockhart speaks financial market conference

4:40 pm : Fed member Yellen speaks about FOMC meetings

Earnings:

Before the Open: ALLT, MT, ACAT, DE, DSX, EVEP, FTE, FRE, ITRN, JBX, M, NICE, CHUX, REDF, SNE, ELOS, BRLC, TEF, TTEC, VSAT, WATG.

After the Close: ACXM, ANW, A, STV, IMOS, CTRP, CUB, FNET, PDLI, PETM, QSII, RUBO, SLRY, SINA, SPTN, SXE, SNS, TK, UTSI.

Thursday

8:30 am : Initial Jobless Claims (last 365K), continuing claims (last 3.02M)

8:30 am : May Empire manufacturing index (last 0.6)

9:15 am : April Industrial Production (last 0.3), April capacity Utilization (last 80.5%)

9:15 am : Fed member Evans speaks at banking conference

9:30 am : FOMC Ben Bernanke speaks on banking risk management

10:00 am : May Philadelphia Fed index (last -24.9)

10:30 am : Natural gas inventories

10:50 am : Fed member Dudley speaks at Fed panel

1:00 pm : May NAHB housing market index (last 20)

7:00 pm : Fed member Mishkin speaks on asset price bubbles

Earnings:

Before the Open: AHR, ASFI, BX, BBI, CHNL, CYPB, DAI, DRQ, DFT, ELON, FRP, FRPT, FSIN, GILT, IART, JCP, MEMY, MESA, MF, MLNM, PDC, PBH, QXM, RSTO, SGK, URBN, WNR, WPL, XMSR.

During Trading Hours: MNTG.

After the Close: AAP, ADSK, BE, BMC, BRCD, CPWR, EXAR, FMCN, GA, HPQ, IUSA, KSS, KONG, LRCX, LTXX, MNT, NINE, JWN, QTM, CRM, TMA, CHIP.

Friday

8:30 am : April Housing Starts (last 947K), April building permits (last 928K)

10:00 am : University of Michigan consumer confidence (last 62.6)

11:20 am : Fed member speaks on mortgage market

Earnings:

Before the Open: LABL, YGE.