[RETAIL]Well, I was wrong.

According to MasterCard’s SpendingPulse, a combination of last minute shoppers and an extra shopping day between Thanksgiving and Christmas boosted retail sales 3.6% over last year’s horrific total.  I had thought we’d be lucky to hit 1% and I’m not going to hide behind the extra shopping day (which added 3%) as an excuse – I simply underestimated the determination of the US consumer to spend money.  We knew E-Commerce was doing well and the other results are very much in line with my more bullish 2010 Economic Outlook, with Electronics and Jewelry doing well while Department and Clothing stores taking a hit.   

I’ve been playing for a big, sharp sell-off that just doesn’t look like it’s going to happen now as it was going to be retail that I expected to take us down, with imminent store closings finally deflating the REIT sector.  Now what?  I have some serious rethinking to do and it looks like we are going to track more in-line with the bullish side of the economy (the success of the top 10%) and ignoring the suffering of the masses for as long as we can get away with it (the French managed for an entire decade before the people finally began taxing the rich on a per head basis).  The seeds of the French revolution were sown in their support for the American revolution (because it hurt England) and other “necessary” wars which put the country deeply into debt and drove up commodity prices causing the poor bulk of the population to downgrade their lifestyle even as the rich prospered and flaunted their wealth – a TOTALLY different situation, so why worry?

Speaking of massive government debt, our Treasury Department has removed the $200Bn (each) caps on aid to FRE and FNM for THE NEXT THREE YEARS, effectively paying whatever it takes to push off the problem of having to foreclose on non-payers and selling off the growing inventory of defaulted homes until AFTER the next Presidential election, when the bill will come in.  Foreclosure filings exceeded 300,000 in November for a ninth consecutive month, RealtyTrac Inc. reported Dec. 10. The firm said filings will reach a record 3.9 million for the year. 

IN PROGRESS