No Inflation?

The market was set to open down this morning but the CPI report came out better than expected and the futures raced up.  Perhaps now the market sees what I’m seeing because the Dow is now down 250 or so.

Are you scratching your head like I am?  We have commodity prices at record highs but there’s no inflation at all?  Hmm.  In addition, if you dig in the report, it shows energy costs actually dropped.  I guess the government’s definition of energy doesn’t include oil prices.

Nobody every believes these numbers but for some reason the markets move when they come out.  As day traders speed things up on their screens, right now we have to slow things down to make money and make sense of what’s going on.  Let’s look at the moving averages of employment, CPI, etc.

The market is selling off hard all of the sudden.  What I can see is JP Morgan & the NY Fed will provide funding to Bear Stearns.  Perhaps the market sees that Bear Stearns was days away from going under and the market is worried about more serious problems from other brokerage houses?

I’ll be back with more in a while.

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