Well, If You Exclude Oil, You See…

Today, I played the role of skeptic — and Man, did I hit for the cycle with today’s CPI comments —  they were picked up by Dow Jones, Briefing.com, 2 separate WSJ articles, and the Atlanta Journal Constitution.

Here’s most of today’s news cycle:

Briefing.com:

Maxim Group’s Barry Ritholtz weighed in with his always entertaining take on the data… "So let me make sure I understand this: U.S. consumer prices rose at the fastest pace in 25 years, and that is somehow a positive for the economy and/or the markets?" He notes that the core price up 0.1% "To me, this means that there’s little ability to pass along producer price increases to the consumer. This will inexorably lead to margin squeezes, and sure as day follows night, that will impact earnings negatively."   On the housing component, with "Housing Prices at all time highs and the affordability index at 14 year lows, we see that ‘Owner Equivalent Rent’ is up a mere +.1%. Need I detail how silly this is? Home prices are up dramatically, and recently we see that [mortgage] rates have ticked up significantly…"    The bright spot: worker earnings relative to inflation? "They fell, as the Labor Department reported ‘real average weekly earnings of U.S. workers, adjusted for inflation, fell 1.2% in September.’ That marks the third consecutive monthly decline of real wages…So the only place where there is no inflation is in the pocketbooks of the consumer, whom I must remind you accounts for 70% of the economy."

Dow Jones Market Talk:

Well, If You Exclude Oil, You See…

"The CPI report’s implications create its usual ardent debate, as the core and overall camps hash it out. "So let me make sure I understand this," strategist Barry Ritholtz of Maxim Group writes on the Web site Big Picture.

U.S. consumer prices rose at the fastest pace in 25 years, and that is somehow a positive for the economy and/or markets

But Merrill Lynch economist David Rosenberg calls the core figure benign and says the softer read is bullish for bonds, and should soothe concerns about inflation at the Fed."
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The WSJ Online (The Afternoon Report): 

If what was being experienced in the late 1970s was "malaise,"
then the initial reaction to the consumer inflation data struck some as
giddiness. "So let me make sure I understand this," groaned Barry Ritholtz,
chief market strategist at the Maxim Group, in a comment this morning. "U.S.
consumer prices rose at the fastest pace in 25 years, and that is somehow a
positive for the economy and/or the markets? Puh-leeze."

The WSJ (TODAY’S MARKETS):

"But
some analysts scoffed at the notion that inflation is benign. "Back out
inflation and there’s no inflation," said Barry Ritholtz, chief market
strategist at Maxim Group. Crude-oil prices "have been going up in
price for three years, housing prices are at a high, food prices are up
and medical care has gone up significantly."

Most investors
still have faith in the core data, however. Gordon Fowler, chief
investment officer at Glenmede Trust, said the core CPI number is "the
best measure of when inflation gets embedded in the economy."

MarketWatch

The CPI report also showed that the cost of owning a home rose 0.1% in September. "Need I detail how silly this is?" said Barry Ritholtz, chief market strategist for Maxim Group. "Home prices are up dramatically, and recently we see that mortgage rates have ticked up significantly.

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Sources:
Eye on the Core
DAVID A. GAFFEN, The Afternoon Report
THE WALL STREET JOURNAL ONLINE, October 14, 2005 1:50 p.m.
http://online.wsj.com/article/SB112930386666268863.html

Stocks Rise on Oil, CPI Data
GE’s Earnings, Oil’s Slide Help Market Turnaround
SCOTT PATTERSON, TODAY’S MARKETS
WSJ, October 14, 2005 4:23 p.m.
http://online.wsj.com/article/SB112928898147468720.html

After Katrina, two economies
Economic data show devastation, but underlying strength
Rex Nutting
MarketWatch, 1:35 PM ET Oct. 14, 2005
http://www.marketwatch.com/news/story.asp?guid=%
7B863AAC47-93F8-4600-B400-B23F2A37CC6A%7D&siteid=google