Market Lab Report - Premarket Pulse 2/19/16
Major averages fell yesterday on lower volume after their three-day straight-up-from-bottom bounce. Leadership remains highly questionable, adding suspicion to the current bounce. Generally, follow-through days that eventually fail tend to do so rather quickly, and so far Wednesday's FTD appears headed for the same fate as the January 28th FTD. A number of stocks also ran right into resistance yesterday, as Gil Morales discussed in yesterday's live intraday webinar.
The CPI came in flat this morning vs. expectations of -0.1%, but excluding food and energy, core prices jumped 0.3%, the biggest gain since August 2011 due to rising medical care and housing costs. Over the past 12 months, core prices are up 2.2%. Of course, the CPI components continue to be manipulated with the ones rising the fastest removed from the CPI, thus the CPI is merely a measure of the current basket of components chosen to keep inflation low which also artificially boosts GDP, and gives the Fed more room to hike rates. That said, even with this distortion, it is interesting that core prices are up 2.2% over the past 12 months suggesting that the Fed has less room to maneuver than expected in terms of reducing interest rates.
Serious slack demand for goods is of course creating lower prices in some sectors, which counters rising prices in other sectors from all the money that has been printed since QE began in late 2008.
Futures are off more than half a percent at the time of this writing.
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