End of Week

In case we hear any nonsense about retail sales numbers as an economic indicator: retail sales did not turn negative year over year until Q3 2008! By which point, the S&P 500 had already fallen 20% from peak. And the XLF was down by a third.

This afternoon, S&P removed the triple-A ratings of France and Austria and downgraded seven others, including Spain, Italy and Portugal. (Italy is now only two notches above junk! What is an Italian consumer loan book worth now??) Next week, it would logically follow for S&P to downgrade the banks and other government-related issuers in the downgraded countries.

Should be exciting! And sentiment is high and shorts have covered already!