* Friday the 13 was an unlucky day on Wall Street

* The Dow was down over 200 points - the second back to back decline of over 1% since August

* What was happening in August? Everybody was convinced the Fed was going to raise rates in September

* Now, everybody is just as convinced that the Fed will raise rates in December

* Once again, as I predicted a week ago, the market sold off

* We are down over 650 points on the week

* Nasdaq is down today even more - 1-1/2%

* The carnage was once again led by the retailers

* Bad earnings out of Macy's Nordstrom's Walmart and others set the scene for new share price lows

* I have been warning about this all year, based on inventory numbers

* All the evidence is flashing recession

* The Fed has been saying that they are data dependent - open your eyes and look at the data!

* This data is consistent with the beginning of a recession

* Yes, unemployment is low, but unemployment is always low when recessions begin

* I think the Fed knows they are not going to raise rates

* The Fed minutes are coming out next week and we'll get an insight into the deliberation between the members

* All Janet Yellen said was that an interest rate hike was a "live possibility" - The market did the rest.

* They took the word "possibility" and assumed that it was a probability

* Let's look at the economic data that came in today:

* First, October Producer Prices - they were looking for a rise of .2, because last month, they actually fell by .5

* We didn't get .2; we got -.4

* As of last month, year over year producer prices have declined 1.1%

* Now they are down 1.6% on the year

* This is going the opposite direction of the Fed's goal of 2% inflation

* The worst number was retail sales:

* They were looking for a rise of .3, which is still not a big rise - but we got an increase of just .1

* To add insult to injury, they had adjusted last month's forecast to zero

* Also x auto, they were looking for a gain of .4 and instead got a gain of .2

* These numbers will subtract from Q3 and Q4 GDP

* We also got September inventory numbers:

* The consensus was a rise of .1, but instead we rose .3

* This rise was not a result of an increase of sales, it is because sales are not keeping up with inventories

* The inventory to sales ratio rose to 1.48 fro 1.47

* The last time we had this number was during the financial crisis

* I have been pointing out that these inventory numbers have been padding the GDP for the last several quarters

* This has been ignored on Wall Street

* This means future GDP will plunge as companies need to liquidate inventories and not replenish them

* Not only that, they will be liquidating their workforce

* The heavy layoffs may not happen this year - more likely they will come in January and February

* The odds are that the Fed is not going to raise rates in December and the odds against a rate hike as the market continues to sink, with more and more bad economic news

* This bad news about retail sales was unexpected by the market as evidenced by the sharp drop in share prices

* Is the Fed going to raise rates just as the economy is turning down? Not a chance.

* If they do, imagine how much worse the economy will be

* The question is: When is the Fed going to come clean and admit that they are not going to raise rates and will their excuse be and will the markets buy it?


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