· The International Council of Shopping Centers (ICSC)-UBS survey indicated that chain store sales last week gained back 0.9% of the prior period's 3.1% collapse. Nevertheless, sales so far in December are 2.9% below the November average which rose 1.2% from October.

· Lower chain store sales in December were accompanied by retail gasoline prices which crept higher to $2.19 per gallon (18.3% y/y) after two weeks at the cycle's low of $2.15. In addition, the spot market price for unleaded gasoline yesterday rose to $1.65 per gallon, up more than 20 cents (16%) from the November low. Perhaps looming larger is the spike in natural gas prices. Yesterday's spot price of $14.8 mmbtu easily doubled last year's and that gain adds to an increase in retail costs which through October totaled 45.3% y/y).

· During the last ten years there has been a 51% correlation between the y/y change in chain store sales and the change in non-auto retail sales less gasoline, as published by the US Census Department. Chain store sales correspond directly with roughly 14% of non-auto retail sales less gasoline.

· The leading indicator of chain store sales from ICSC added 0.2% (-0.3% y/y) to the 1.0% surge the prior week.

· The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.