By Michael Ashton
Summary of my Post-CPI Tweets
Below you can find a recap and extension of my post-CPI tweets. You can follow me @inflation_guy or sign up for email updates to my occasional articles here. Investors with interests in this area be sure to stop by Enduring Investments.
- core CPI +0.157%, so it just barely rounded to +0.2%. Still an upside surprise. Y/Y rose to 1.69%, rounding to 1.7%.
- y/y headline now +0.0%. It will probably still dip back negative until the gasoline crash is done, but this messes up the “deflation meme”
- (Although the deflation meme was always a crock since core is 1.7% and rising, and median is higher).
- Core ex-housing +0.78%. Still weak.
- Core services +2.5%. Core goods -0.5%, which is actually a mild acceleration. So the rise in core actually came from the goods side.
- Accelerating major cats: Apparel, Transp. Decel: Food/Bev, Housing, Med care, Recreation, Other. Unch: Educ/Comm. But lots of asterisks.
- Shelter component of housing rose back to 3% (2.98%) y/y; was just fuels & utilities dragging down housing.
- Primary rents: +3.54% y/y, a new high. Owners’ Equiv Rent: 2.69%, just off the highs.
- In Medical Care, Medicinal Drugs 4.13% from 4.16%, but pro services +1.47 from +1.71 and hospital services 3.28% from 4.08%.
- In Education and Communication: Education decelerated to 3.5% from 3.7%; Communication accel to -2.2% from -2.3%.
- 10y breakevens +3bps. Funny how mild surprises (Fed, CPI) just run roughshod over the shorts who are convinced deflation is destiny.
- No big $ reaction. FX guys can’t decide if CPI bullish (Fed maybe changes mind and goes hawkish!) or bearish (inflation hurts curncy).
- Here’s my take: Fed isn’t going to be hawkish. Maybe ever. So this should be a negative for the USD.
Continue reading Post-CPI
Sometimes we don’t know why a chart is doing what it is doing. All I knew was that GOOGL was making a nice chart pattern, so it was noted as an NFTRH+ trade setup.
Having sold the initial run, I bought it back on the drop to a secondary buying area, as noted in NFTRH. Today we are treated to some hype about Morgan Stanley’s high powered CFO trading her Manhattan view for Mountain View. Ruth Porat joins the team.
Not to make light of it. It’s probably a nice move for Google. But the stock is moving on it and in that regard it is hype. So I may decide to sell. Since you don’t pay me to make decisions for you I’ll not publicly make that decision. NFTRH subscribers who may have taken these trades are profitable and they are grown men and women who can make their own decisions as to what profit is acceptable as well.
The target of 590 remains, but I often sell below targets. It’s just how I do it.
Up by .2% the BLS reports this morning…
Consumer Price Index Summary
Here is the graphical view of recent CPI history…
The US dollar has been correcting and over at NFTRH.com we showed some support parameters for Uncle Buck.
Also, as noted in the precious metals update for subscribers this morning, silver is making a move vs. gold and this will be a key indicator on whether or not a good old fashioned ‘inflation trade’ can get going. It has not triggered a signal yet, but it is flirting.
The thing is, there has been a nice deflationary pull coming out of Europe and Asia that has played into the US Goldilocks scenario (strong US currency, strong stock markets and tamped down prices within the economy). Europe is inflating its asset markets (i.e. trying like hell to boost prices)… Europe Fights Lower Prices.
 Also see Euro Area PMI’s Continue Upward just posted at NFTRH.com.
Now, prices may be becoming an issue within the US economy as the global situation eases (literally).
By Alhambra Investment Partners
There really isn’t much to say about the housing market in the US right now except that economists clearly don’t know what to do with it. Having signed up wholeheartedly for the “booming” economy, or at least the narrative thereof, flagging sales in both new homes and resales doesn’t compute. Instead of recognizing why that may be, especially as it relates to the clear, obvious and unambiguous monetary influence in it all, the best they can come up with is something like this:
Lawrence Yun, NAR chief economist, says although February sales showed modest improvement, there’s been some stagnation in the market in recent months. “Insufficient supply appears to be hampering prospective buyers in several areas of the country and is hiking prices to near unsuitable levels,” he said. “Stronger price growth is a boon for homeowners looking to build additional equity, but it continues to be an obstacle for current buyers looking to close before rates rise.”
I’m at a total loss to understand what that statement actually means in anything like a real economic circumstance. According to basic supply and demand, “strong price growth” should not in any way be a constraint upon supply of houses for sale; quite the opposite. Mr. Yun takes this to an extreme whereby he actually supposes that lack of supply is restraining buyers!
Continue reading What Home Sellers Know That Economists Don’t
While we’re on the subject of Mr. Bullard, the opening segment from this week’s NFTRH (#335) had a little fun with the Fed. Serious multi-market and economic analysis came later, but sometimes you just need to shake your head in awe and wonder.
The Fed is important because millions of market participants believe it is important and a critical mass of people are under the illusion that its policies have put the “Great Recession” in the past and laid a path for a sustainably good economy going forward. In short, confidence in the Fed has never been more pervasive as it reaps the reward (the respect and confidence of the majority) for a job well done.
Never mind for now that previous Fed policy is what fomented the “Great Recession” (i.e. a near liquidation of the system) and the supposed remedy has been similar but more intensive policy using official credit as opposed to commercial credit as the stimulant.
Through this cycle I have watched Gold Bugs that used to rail against “Helicopter Ben” fade to black, the Bond Vigilantes who would short the long bond (including one over exposed Vigilante, formerly of PIMCO) get their hats handed to them and the general backdrop of distrust and revilement toward the Fed simply get erased somehow.
It’s as if a majority of market participants are little more than black boxes with certain coding for certain cycles. Today the code might look something like this…
<caption>Sit quietly and we will control all that you see and hear</caption>
Continue reading Peak Fed
Bullard (on dropping “patient” from the wording): “We’ll be able to make a move, but we don’t have to make a move.”
“I think there was some dovishness because those dots all moved down and… one of the things about those dots is, ahem, for, for me for instance, I had a, a [*] liftoff in March; so it was the March meeting and we weren’t lifting off so I couldn’t say March anymore and we already swore off April so I had to say June.
So that moved my whole path down and according to my model that was the best we could do given where we were so I said okay we’ll lift off in June and go on from there. Well, that moved my whole path down ah, you know, 50 basis points. So I’m not sure that I’ve become sort of more dovish, it’s just that the committee ah, didn’t move in March when I said, so I had to move my dots down. So I think there is some misinterpretation about what this dot movement really means.”
“So you think the market is confused when it comes to reading the dot path?”
Are you kidding me Jim ‘…err we can always come out with QE4…‘ Bullard?
What kind of oatmeal is this dribbling out of my favorite Hawk’s (or if you prefer, Bad Cop’s) mouth? Where’s Fisher? Let’s get him in here to lay down the law! Bullard’s letting the dots bully him.
 I almost forgot, Richard stepped down and now sits on the Pepsi board. I don’t have an opinion about whether Pepsi is better than Coke, but I do have the opinion that they have a sterner BoD.
* Sounds to me like he’s reading a script stored in his frontal lobe, with the ahems, ah ah’s and a, a’s a pause to access the memory banks.
By Doug Noland
Credit Bubble Bulletin
The S&P500 rallied 45 points (2.2%) intraday on Federal Reserve Wednesday, to end the session with a 1.2% gain. The dollar index traded with an intraday range of 99.83 to 96.63, with bloody currency market chaos breaking out with the Fed statement release. EM currencies enjoyed huge rallies. The Russian ruble jumped 3.4% Wednesday, with the Hungarian forint gaining 2.8%, the Polish zloty 2.6%, the Mexican peso 1.9%, the Turkish lira 1.7%, the Colombian peso 1.2% and the Brazilian real 0.9%. After trading down to $42 Wednesday morning, WTI crude surged above $45 in the post-Fed melee. As with the currencies, most of the move came in three minutes. The Goldman Sachs Commodities Index spiked 3.6% on the Fed announcement.
A few notable post-Fed headlines: “Dollar Tumbles Most Since 2009 After Fed Cuts Rate Projections.” “Emerging Currencies Set for Biggest Weekly Rally in Year on Fed.” “Asian Currencies Advance Most This Week Since 2012 on Fed Signal.” “Asia Bond Risk Slides Most in Six Weeks After Fed Lowers Rate Forecast.” “Onshore Yuan Heads for Biggest Three-day Gain Since 2007.”
Continue reading True Ultra-Dovishness
A top of the line report from a top of the line service.
Wow, look at the big rally in Copper (hourly)…
Wow, look at the resistance coming up (monthly)…
It’s all in how you want to cherry pick time frames.
The monthly chart says it’s all just noise until Copper clears 3 bucks a lb.
 Make post, sector reverses on cue. Manias include volatility.
Biotech ETF IBB is now taking on the look of… anyone? Bueller?