This might be the ultimate buy signal since the wheels came off the rally.  Not because the market reversed but because buyers emerged in the midst of the latest reason for them to panic.      

So, the inflation number came in hotter than expected, and all hell broke loose with the Dow shedding a potential 150-point gain seen in pre-open trading, to an actual decline of more than 300 points, as man and machines (mostly machines) sold first and still aren’t asking questions.  Investors should, however, ask questions before getting shaken out of this amazing rally. 

The +0.5% month to month CPI headline increase was above consensus, but this has happened three times in the past year.   The previous two, however, were without all the pre-announcement fear-mongering.

Core Inflation (data excluding food and energy) came in unchanged, up 1.8%, and still below the Fed target of 2.0%.

Inflation But Not Runaway Variety 

If you eat at home and bought a new car you might not have noticed any inflation last month, while those that bought a used car and eat out often certainly felt a bigger pinch.

Lifestyles and Inflation
New Vehicles	-0.1
Used Cars	+0.4

Lifestyles and Inflation
Food at Home	+0.1
Food Away	+0.4

Red Flags

Biggest Month to Month Increases:

• Apparel +1.7%
• Hospital Services +1.3%
• Car insurance +1.3% (largest increase since 2001)

Crude started lower, but it has gone up since the EIA data come out showing an increase of 1.8 million barrels, which was lower than expected.  WTI is currently up 2.25% to $60.51 and Brent is up 2.46% to $64.26.

EIA Petroleum Inventories	Actual	Expected
Crude Oil	+1.8 million	+2.8 million
Gasoline	+ 3.6 million	+1.2 million
Distillates	-0.5 million	-1.1 Million

Retail sales for January 2018 came in at -0.3% versus consensus estimates of 0.2%. 

Year over year sales:

• Total sales +3.9%
• Non-Store Retailers u+10.2%
• Food and Drinking Places +2.1%
• Gasoline Stations +9.0

Comments

Radio news this week: The tax receipts for January 2018 that the federal government collected were more than expected - something like 2.6 billon dollars. The goverment only spent 2.12 billion in January. Why isn't this being reported anywhere??? Big news in my estimation. Getchel Wilson on 2/14/2018 4:32:34 PM

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