Last week I wasn’t commenting too much believing a lot of the action was window dressing on light volume. Sure, there was a lot of talk of the new Obama financial team that investors seemed to like at least temporarily. Also bulls believe stimulus packages and massive liquidity injections globally will turn the tide eventually.

Unfortunately for them, the deflationary trend remains intact. This is troubling and try as authorities might the trend isn’t reversing. Further, bond markets are sending a highly negative message regarding deflation and negative economic growth.

The behavior of American shoppers [dba, Chucky] is an embarrassment. But it seems more about event hysteria than anything else. More importantly preliminary data indicates strong sales but only on heavily discounted merchandise which means little profits for retailers. I’m still thinking Chucky and the kids will be stringing popcorn to decorate their twig of a Christmas tree. But, they’ll do it watching their plasma TV and eating the old maids.

Have a pleasant evening.