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CPI & the Soft Landing

Jim Cramer states:

"The consumer price index comes in just right for a soft landing. Now where are all of those hard-landing folks who kept weighing in -- and on us? Where are the fearmongers today? Or do they only come out when we get a "bad" number that agrees with their thesis?"  -Good CPI Dashes Hopes of Fearmongers

I don't think of myself as a fearmonger, but rather as a realist and anti-cheerleader. But since Jim threw down the gauntlet, let's address some recent data points:

• Core CPI was actually +0.2423%; (Rounding brings it down to +0.2%). That's 2.9% annualized;

• Industrial production, capacity utilization, utilities generation, and manufacturing output -- were all lower;

• July's Headline Retail Sales, originally reported as +1.4%, was revised down to +0.2%; Various subsectors were revised down. Ex-Autos were originally 1.0%, revised down 40% to 0.6. Just about everything but Groceries and clothing had significant, downward revisions. Groceries was revised up in July, and then again in August. A friend asks: "Do you think we are eating more or paying more?"

• August Retail Sales -- widely touted as surpringly strong -- were nothing of the sort. The Census Department includes unit sales of used cars, boats, RVs, parts, etc. We already Daimler's warning, and we saw the sales data from everyone else. That pretty much leaves used cars as your source of gains;

• In the past 16 Federal Reserve tightening cycles, there has been one true soft landing in 1994. I continue to look at that not as impossible, but as a low  probability event;

My largest present concern is Oil and other commodity prices. Its no coincidence that gas, oil, gold, aluminum and copper all have dropped at the same time. I read that as signs of a global slowing in demand.

By the way, this is consistent with what I have previously discussed about Nasdaq and Oil doubling in response to low rates and global expansion. I detailed much of this yesterday in Inconsistent on Oil: heads we win, tails you lose . . .   

Friday, September 15, 2006 | 10:31 AM | Permalink | Comments (49) | TrackBack (0)
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Comments

hello from germany,

i´m happy that you put things in the right perspektive.

i feel way too often that the whole markets are reacting just to the propaganda that wall street is presenting them.

i have to admit that they do a very good job in masking the facts.

here is something more on the "rotten core"

http://immobilienblasen.blogspot.com/2006/09/rotten-core-rate-inflation.html

http://immobilienblasen.blogspot.com/

Posted by: jmf | Sep 15, 2006 10:50:49 AM