Stronger Holiday Shopping. EU Liquidity.

Retail (week ended 12/24)
-ICSC-Goldman Store Sales, Week/Week +0.9%. Previous was +3.4%.
-ICSC-Goldman Store Sales, Year/Year +4.5%. Previous was +4.6%.

-Redbook Store Sales, Year/Year change +4.3%. Previous was +3.4%.

These two reports indicate an improved holiday retail season.

EU Situation
From WSJ: The amount of money parked by euro-zone banks at the European Central Bank surged to another new record, as banks used the ECB’s latest vast liquidity injection to build up reserves rather than take on new risks.

Interbank lending in the EU is evaporating in a manner similar to that which happened in the U.S. post-Lehman. Banks both in the U.S. and the EU are choosing to park their excess reserves at the central bank rather than lend it and suffer possible loss.

Add to this the new capital requirements of Basel III and you have an excellent plan for stagnation.