After a positive morning for the market, comments from the Federal Reserve regarding inflation have brought out the bears and pushed the indexes down into the red.

When the Fed was busy cutting rates by a total of 1.25% last month, the message it was sending to the market was that inflation was under control, and the Fed was more concerned with growth and less concerned with inflation. Stating that inflation concerns had eased enough to warrant steep rate cuts, the Fed acted twice during January. The first cut came in the form of an emergency 75 basis point cut, and then the following week the market was given an addition cut of 50 basis points.

Today, Federal Reserve Bank of Philadelphia President Charles Plosser, has stoked inflation fears once again by stating that inflation was still on the Fed's minds. Plosser, speaking to the Rotary Club of Birmingham, Alabama, stated that he believes core inflation will remain above 2% through the year, which could prevent further rate cuts in the future.

This may turn out to be a holiday season only The Grinch could love.

The closely watched Conference Board index of consumer confidence fell to 87.3 in November, its lowest level since Hurricane Katrina in 2005, while house values fell 4.5% in the third quarter, the biggest drop since S&P/Case-Schiller started tracking them in 1988, according to Bloomberg News. Rising foreclosures will sap billions from major metropolitan areas next year, according to a report released today by the National Conference of Mayors.

To put it bluntly, despite the hoopla over Black Friday and Cyber Monday, all indications show that consumers are telling retailers "bah humbug." Does this mean that Santa (AKA Federal Reserve Chairman Ben Bernanke) will bring more holiday rate cuts? At least one fed official says no.

In a speech today in Rochester, NY, Charles Plosser of the Federal Reserve Bank of Philadelphia said that he isn't inclined to seek another rate cut unless growth in 2008 is much weaker than expected. Besides, a weaker economic outlook for next year was considered when the Fed cut rates in October.

The stock market, though, continues to act irrationally.

Today, the Dow Jones industrial average surged 215 points to 12,958.44 after Citigroup Inc. (NYSE:C) got a $7.5 billion investment from a fund tied to the government of Abu Dhabi. That's nice but as Bloomberg News points out, that investment came with a steep price.

"Citigroup Inc., the biggest U.S. bank, is paying a "junk bond'' rate to uphold Chairman Robert Rubin's pledge to preserve the dividend and weather this year's mortgage-market decline," the news service says. "The 11 percent interest rate on $7.5 billion of convertible shares that Citigroup sold to the Abu Dhabi Investment Authority is almost double the rate it offers bond investors."

This proves that there is no so such thing as a free lunch.