WHAT INFLATION?
The latest CPI numbers out yesterday. CPI — +.02%, Core CPI —- +.01%
These numbers are hard to accept. What I accept is the changing methods as to how inflation is calculated. Barry Ritholtz at http://bigpicture.typepad.com/comments/ has been giving us great updates and info on the changing face of inflation stats.
If the market wants to rally, then so be it. I remain skeptical of this latest upswing in the market, as the financials have once again tanked on potential further write-downs and the realization that the income statements will be hard to justify a growth story going forward.
The VIX has dropped significantly to the mid-teens again. This continues to take away the all-important volatility trades I look for. With a overly enthusiastic energy sector that I do not care to chase or short, there is little else to play except for quick technical breakouts and piling on with the other technicians who see the same thing.
BESPOKE INVESTMENT GROUP, http://bespokeinvest.typepad.com/bespoke/2008/05/1990-all-over-a.html offers a great chart of the current market compared to the 1990 market, the last time we had a financial crisis. I would tend to agree that another decline is needed to cleanse the sector froth and truly give us the needed rotation to support another bull market. While the chart implies it may occur in the next month or two, I stick with the second half 2008 concern with still overly optimistic earnings growth.
3 years ago • Notes