More Data Points

 

 

by Larry Levin

Although there was another rally on Fraud Street Friday, it was yet again on ridiculously low volume.  Because of the low volume and no volatility whatsoever, the rally was quite slow. There were several periods of the day that lasted one to two hours when the range was only 5 or 6 ticks wide.
 
More data points…

• According to Friday’s CPI, consumer level inflation is rising: it was higher than expected like the PPI. December CPI was +0.5%, which is 6% annualized inflation. Good thing Benron Bernanke says this inflation stuff is a mirage; otherwise I would be nervous of higher prices. But don’t worry folks, if you strip out the things that you use every day and go up in prices, there is no inflation.
• Overall energy costs jumped 4.6% last month, while gasoline specifically spiked 8.5%. What you won’t hear from the equity shills on television is that this spike in energy costs has already negated ALL of the recent tax cuts by president Obama and Congress. So when you hear a Congressman or White House mouthpiece talking up the “coming boom” from tax cuts…you already know it’s a lie; it has been overtaken by higher food and energy costs.
• To be fair, as long as this recent CPI/PPI trend doesn’t continue (and I have my doubts on that) there shouldn’t be brutal inflation until CREDIT “inflation” surges. However, even then the FED and the BLS will find ways to exclude whatever goes up in price to keep the slack-jawed masses uninformed.
• Retail sales were good but 25% lower than expected.
• Industrial production was better than expected but this was due to a surge in energy demand. Yup, a cold winter = more energy demand = “industrial production?”
• Friday’s consumer sentiment data was a big miss – much worse then expected.
• Finally, business inventories were a huge miss from expectations and collapsed 75% from last month. Inventories rise when the economy is growing to meet demand and fall when the economy weakens.

Trade Date: 1/14/11
E-Mini S&P Trades*
(before fees and commissions):

No “Secrets” trades filled Friday.  Algorithm positions (8)  “Reading the Tape” positions (4) …combined Secret’s, Algo, & “Reading the Tape” total… +5.00

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