Rob Parenteau, currency and credit markets expert, and editor of The Richebacher letter, analyzes the current state of the economy, as represented by retail sales. Can retail really drive the recovery?

John Stepek (Money Week UK):
Deal making is back!

That was the general reaction from the press when US food giant Kraft launched its first bid for British confectioner Cadbury less than two months ago. Pundits spewed out potential target prices like bingo numbers – £8, no £10, no £12! – and analysts scribbled out scenarios involving white knights and rival bidders from across the globe.

Prices for food in U.S. grocery stores jumped 6.6% last year – the biggest spike since 1980 – underscoring yet again that inflation is a much bigger problem than government officials, or most economists, say it will be.

In the currency market, the dollar was sharply higher against the euro for the second straight day. Late Thursday, the euro was trading at $1.5682 vs. $1.5881 on Wednesday.

According to the latest survey from Axa, 75% of households plan to cut back this year as the credit crunch bites. Sounds sensible – until the survey then reveals that most are stuck as to whether to cut back by “going out less”, or simply reducing the amount they save for their pensions.