Posts Tagged ‘CPI’

Notes From Underground: Putting This Week In Perspective

August 10, 2017

Just when the volatility sellers were heading to the beaches to bask in the glow of easy money comes the tweeter-in-chief to crush the complacency. The airwaves were full opiners who warned of a market that is fully valued.Gundlach and Dalio added their two cents for measure, espousing the need to hold GOLD as a hedge against geopolitical uncertainties. Again, it is not political uncertainty but the malfeasance of central banks that should be the concern of global investors. Deflation is the ingredient for central bank panic. As Peter Boockvar reminded his readers today: Gold is a monetary haven.


Notes From Underground: We Won’t Be Fooled Again

May 14, 2014

I’ll move myself and my family aside

If  we happen to be left half alive

I’ll get all my paper and smile at the sky

For I know that the hypnotized never lie
                                   — The WHO
I’d like to follow-up yesterday’s blog post and the dilemma for the Fed in regards to low inflation and low wages, as in, which way will interest rates turn? Today the bond yields dropped in spite of a much higher PPI (producer price index), which measures wholesale inflation. If producers cannot pass higher input costs onto the consumer, profits will suffer. Tomorrow, the BLS will release the consumer price index, CPI, which is expected to be up 0.1 percent on the core and 0.3 percent on the headline number. If the data is higher than market consensus it will be interesting to see if the BONDS and NOTES shrug off inflation fears and continue the recent rally. The price of the 10-year note closed above the 200-day moving average for the first time in two months, even as the 30-year bond has been above the 200-DMA for the same period of time. The rally in the 10-YEAR NOTE acted to flatten the curve but I warn you, readers, that this curve is far from being flat by historical measures. Two-hundred eighteen basis points is far from being flat and again I remind readers that a year ago the 2/10 curve was a much flatter 145 basis points.


Notes From Underground: Draghi Takes Center Stage; Will Mervyn King Pump Up The Volume?

February 8, 2012

Tomorrow the BOE and ECB will release their interest rate intentions. The Bank of England is expected to keep the funding rate at 0.50% while moving to increase the ASSET PURCHASING FACILITY (QE BY ANY OTHER NAME) by another 50 BILLION POUNDS to a level of 325 BILLION STERLING. The recent speeches from the Monetary Policy Committee have had a DOVISH bias, prompting the consensus view for an increase in the QE program.



November 21, 2011


Today’s 2-YEAR NOTE auction in the U.S. received a 4.07 bid to cover ratio, the highest in records dating back to 1992. The rate NOTE BUYERS received was a meager 28 basis points. (Yes, thank you sir, may I have another?) There are those on the FED who are concerned that inflation is a threat and feel that the FED is too easy to meet its stable price mandate. The question becomes: Which financial geniuses are purchasing a TAXABLE INSTRUMENT AT A LOWER RETURN THAN THE INFLATION RATE?


Notes From Underground: Mr. Bernanke, Remember your Bailiwick is MONETARY POLICY

June 15, 2011

Today’s economic data continued the recent pattern of tepid activity. The EMPIRE MANUFACTURING INDEX was very soft but the analysts believe that the Japanese earthquake played havoc with global supply chains and thus impeded some manufacturing sectors. The CPI number was right on target and thus had no impact. The CAPACITY UTILIZATION and INDUSTRIAL PRODUCTION were on the soft side, which added more concern to the fragility of the U.S. economy. Markets are left with moderate growth while being plagued with the continual problems of the PIIGS.



April 14, 2011

The news out of Europe today was not favorable for Greece as it was reported in the German paper DIE WELT that German Finance Minister Wolfgang Schäuble suggested Greece would need to restructure. Schäuble’s comments led the cost of interest rate on the DEBT of the peripherals to rise. By day’s end, Greek 2-year rates climbed to 16.8 percent. Portugal rose 25 basis points to 8.87 percent and Ireland increased 25 basis points to 8.20 percent. Spain’s bonds were also priced higher as rates increased 10 basis points. All in all, not a very splendid day for the European debt-stressed nations, but yet again the DOLLAR could not gain ground against the EURO as an initial DOLLAR rally faded quickly. It appears that some central banks are recalibrating reserves as even a DOLLAR rally seems to be so short-lived. The EURO has performed well even though it has the cloud of uncertainty overhanging its economic and political situation.


Notes From Underground: Inflation sets on the BRITISH empire

February 15, 2011

The inflation data released by the U.K. showed that CPI has increased to 4 percent. The largest price increase was in INK costs as Mervyn King had to pen another letter to the Chancellor of the Exchequer explaining the price increases maintained during the BOE’s inflation-mandated levels. King has placed himself in a difficult position as he has held rates steady in the face of rising inflation. Governor King’s stance is the same as Bernanke’s. The rise in prices are due to elements that the CENTRAL BANK cannot effect and the inflationary impact is acting as a drag on the consumer. Why ?


Notes From Underground: Mubarak delivers the U.S. Foreign Policy Establishment a KY Moment

February 10, 2011

As expected, the Bank of England held the overnight lending rate at 0.5 percent. The POUND held its ground and actually rallied against the other major currencies. The U.K. yield curve steepened a touch but basically rested as it has been very active of late–it widened out with the MPC acquiescing to the recent rise in CPI numbers. The markets will have to wait until February 23 to find out the breakdown of the nine-member panel voting record. In the U.S., the JOBLESS CLAIMS number was much better than expected as the number dropped to a two-and-a-half-year low. The credit markets were numb to this data point as it has been so volatile due to weather-related effects.


Notes From Underground: when it comes to the markets, is no news good news??

August 1, 2010

This weekend was a slow news weekend for impact-worthy events. The Chinese PMI data was somewhat tepid but not as weak as expected. Again, we state that we don’t trust the Chinese data at all. We must remember how the U.S. data is so badly flawed, so why should we trust the economic releases of an economy that is so ostensibly government controlled? Good, bad or ugly, we have very little respect for Chinese data. We hope we are clear on that but we report it only for the initial impact it can have on trades.


Notes From Underground: A quick note from NOTES

July 28, 2010

An issue we continue to raise with our readers is how dynamic markets are in the processing of information. When people are technically oriented, it is the numbers–be it trend lines, moving averages, fibbonacci or whatever. The bottom line is that the number is the number and that is it, though not science, but certainly the art of probability. As fundamental traders first we are always aware of changes in the markets psyche. We utilize technicals to limit our loses or provide price areas where we can get more aggressive in moving into a trade. Last night we received a fundamental piece of data from Australia: the CPI number. The market had been anticipating a reading of .8 percent and the actual release showed consumer prices up only .5 percent.