Yesterday morning, the Key Inflation Data Release came out before the open and curbed early selling pressure. The gist was: there is no inflation, which means the accommodative Fed remains accommodative. In fact, there is no doubt the Consumer Price Index (CPI) coming in at 0.1% probably adds more pressure to cut rates.

However, there are several areas of our daily lives where prices are going through the roof.

% Spending	Category	1 Year Change
7.2%	Medical Care	5.1%
7.8%	Rent	3.8%
24.1%	Owner	3.3%
6.2%	Food Away from Home	3.1%
3.8%	Gasoline	12.8%

The Message of the Market

The S&P finished fractionally lower and down for the first Thursday since before Thanksgiving, but there was never any sense of panic.          

S&P 500 Index		-0.16%
Communication Services (XLC)	+0.02%
Consumer Discretionary (XLY)		-0.17%
Consumer Staples (XLP)	+0.59%
Energy (XLE)		-0.31%
Financials (XLF)		-0.03%
Health Care (XLV)		-0.47%
Industrials (XLI)		-0.56%
Materials (XLB)		-0.36%
Real Estate (XLRE)	+0.61%
Technology (XLK)		-0.27%
Utilities (XLU)	+1.11%

I continue to take great pains to point out 100 and 200-point swings on the Dow Jones Industrial Average (DJIA are no cause for alarm, as the swings are less than the historical average and historical up or down moves. That’s why the CBOE Volatility Index (VIX), a gauge of volatility, has been well below the spike to 24.5 last summer; it remains a million miles below the all-time high of 79.0 back on October 20, 2008.

After the Close

New Hotshot Names Posting Powerful Financial Results:

• Nvidia (NVDA)
• Roku (ROKU)
• Expedia (EXPE)

Old Hotshot Names Rallying on Okay Earnings:

• Mattel (MAT)

Portfolio Approach        

The market has been down in four of the last five Fridays, as investors prefer to build some cash ahead of potentially bad news from China.

Day two of the new coronavirus evaluation method yielded 4,823 news cases, well below the 15,000, which was a shocker on Thursday. 

Today’s Session

Yesterday, the rally attempt faded after a note from the Federal Reserve that it would start to curtail its repo intervention.   The news was inevitable, but the knee-jerk reaction of disappointment underscores how sensitive the stock market is to Federal Reserve accommodation even when it’s not officially accommodation.

Retail Sales

Overall, the retail sales report was in-line. I think there was hope it would be a little higher.  Excluding motor vehicles and gasoline, the number was slightly better than consensus. 

Highlights

Building materials, which dovetails perfectly with the spike in mortgage refinancing and applications, and explains why Home Depot (HD) is hiring 80,000 spring workers, rose 2.1%.

Food and drinking place strong month to month and year to year reflects disposable income and underling confidence.

Lowlight

Clothing plunged, which some attribute to warm weather, and it also explains the -1.3% plunge in apparel prices from a year ago.

Bottom line, the report was a little disappointing, but it is still reflective of a smarter consuming public that is still buying.

January Retail Sales Report	M/M	Y/Y
Retail & Food Services	0.3	4.4
Ex-motor vehicle and gasoline	0.4	3.3
Furniture	0.6	1.8
Electronics	-0.5	-3.2
Building materials and garden equipment	2.1	-1.3
Food & beverage	0.2	2.3
Grocery stores	0.3	2.5
Health care	-0.4	-1.9
Gasoline	-0.5	10.4
Clothing	-3.1	0.0
Sporting goods	0.1	-1.8
General	0.5	2.1
Department stores	0.1	-5.5
Miscellaneous	2.3	9.5
Internet	0.3	8.4
Food & drinking places	1.2	7.4

Comments

I don't know about the eastern part of the U.S., but out here in the West, there is definitely inflation of at least 3-5%. And, for the retired population, their meager SS has done nothing but to help them go deeper into poverty. The so called 1.6% COLA they gave this year was eaten up by them increasing the cost of our Medicare Insurance! Some day soon, the old people whom most had to work all their lives, are going to rise up and make the politicians do something about the whole SS situation. William Brown on 2/14/2020 9:52:29 AM

I agree with you.  Charles Payne on 2/14/2020 11:47:23 AM

Any insight into your +12.8% on gasoline prices? In Texas (DFW), gasoline just hit a long term low at $1.989/gallon. Is the +12.8% due to gasoline material cost or just due to greedy state legislators upping their gasoline taxes? Bob on 2/14/2020 9:59:13 AM

Hello Bob  I'm not sure but keep in mind this is a January number from the government so it takes into account the entire nation. So, to your point states and municipalities have added so many taxes and other costs its ridiculous.   CP Charles Payne on 2/14/2020 10:05:25 AM

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