WTF Headline of the Day

as of 3:04pm

From the usually data (not spin) driven Bloomberg homepage:

Inflation Stays in Check

I don’t get that.

Here’s how I read this morning’s inflation data (as Crude Oil, COINCIDENTALLY, rallies to $89):

The September CPI rose 0.3% headline, and 0.2% core vs the consensus of 0.2% for both. That’s a huge upside surprise on the headline number.

Year over year, headline CPI rose 2.8%. Thats the highest level since August 2006. The core
rose 2.1% for the 2nd straight month Y/Y.

Owners equivalent rent (OER) rose 0.3% for the
first time since March. With foreclosures increasing and lending standards tightening,
more people will be renting, potentially pushing this number up further. (OER = 23.8% of CPI).

Food prices rose 0.5% and are now up 4.5% y/o/y.

Miller Tabak’s Peter Bookvaar points out that in response to the number, "the
implied inflation rate in the 10 year TIPS has ticked up to the highest since
July. Inflation pressures won’t go away."

I have nothing further to add . . .

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What's been said:

Discussions found on the web:
  1. michael schumacher commented on Oct 17

    “The figures should “further ease inflation concerns and allow the Fed to focus on risks to growth,” said Zach Pandl, an economist at Lehman Brothers Holdings Inc in New York, which correctly forecast the rise in the core rate. “To the Fed, the current level of core CPI inflation is only moderately high, and it will not significantly constrain their policy options at upcoming FOMC meetings.”


    “we need another rate cut as inflation is not the issue… our growth at any cost strategy is”


  2. JustAGuy commented on Oct 17

    I noticed the same thing on an AP (or maybe Reuters) story this morning. Headline said inflation was under control but the story told the opposite. I know editors write the headlines and not the reporter who wrote the story. Maybe they are following orders to keep things orderly in the market place.

    Happened to catch ABC News last night talking about how awful the housing market is right now. Reporter interviewed by Charlie Gibson and asked if this will impact the economy as a whole. Not really, says the reporter, who gives some superficial reasons. “A very resilient economy” says Gibson, or to that effect.

    I guess everyone is trying to calm the natives.

  3. UrbanDigs commented on Oct 17

    I guess the mentality goes —>



    …what a wonderful fantasy world that place must be!

  4. Peter B commented on Oct 17

    For the 1st time since 2003, the Fed’s Beige Book talked about slowing growth, specifically today saying “economy continued to expand, pace of growth decelerated.” Some headlines off the tape, ‘retail sales softening; outlook uncertain’, ‘housing to stay subdued for several months’ ‘firms see higher than usual economic uncertainty’ ‘factory work slowed by weaker home building’ ‘some regions have job growth’ On inflation, higher raw material prices are evident, especially energy, the weaker $ is causing import prices to head higher but companies abilities to pass on these higher costs were mixed. Bottom line, the economic slowdown is certainly grounds for the Fed to cut rates again but rate cuts have proven to have unintended consequences such as higher inflation pressures and a depreciating $ and maybe the fed cut 50bps so they didn’t have to cut again in Oct due to this.

  5. Estragon commented on Oct 17

    When I follow the link to the BB story, the headline reads:

    U.S. Economy: Housing Starts Decline to 14-Year Low (Update3)

    There is no “inflation stays in check” headline on the BB home page. Maybe the BB editor read your WTF post?

  6. 12th percentile commented on Oct 17

    This is my favorite Headline of the Day. Currently on CNN’s home page under Biz section, “Signs the Credit Crunch is Over”.

    Click through to the article and the actual headline is “Think the credit crunch is over? Think again
    Despite what Wall Street boosters would have us believe, the credit crunch is far from over”

    So they couldn’t get the biz section editor to misrepresent the article but they were able to get a nice headline on the home page saying the credit crunch is over.

  7. Costa commented on Oct 17

    Since, inflation is no big deal. what are the futures saying about another fed rate cut?

  8. DavidB commented on Oct 17

    There are only two events that the wonderful wizard of debt considers bad. Wage inflation and deflation. Those are the two witches in this picture. Everything else can be priced in, cut back for, rationalized out etc. etc. etc.

  9. Michael Donnelly commented on Oct 17

    am I crazy ? every single time I do the calculation for Social Security benefits I get the same number 2.36%, yet the news releases say the benefit is 2.27% (1079/1055)

    Are retirees getting shafted by 0.09% on rounding?

  10. Estragon commented on Oct 17


    Dunno about futures, but IRX (CBOE 13wk treasury yield index) went from ~4.1 to 3.9% today, which is a fairly big intraday move.

  11. Estragon commented on Oct 17


    On wage inflation, the beige book today had this to say:

    Labor markets remain tight across much of the country, and there continues to be moderate upward pressure on wages and benefits. Job growth eased in some regions, however, and wage pressures softened.

    Most Districts report worker shortages in a variety of occupations, with sizable wage increases for workers in short supply. Positions mentioned as difficult to fill include scientific, technical, accounting, finance, engineering, marketing, health-care, truckers, welders, ironworkers, crane operators, office workers and energy-service workers. Low-skilled and entry-level workers are in short supply in some areas, including those in the retail and hospitality industries.

    On balance, this suggests the probability of wage inflation is still very real. This is likely to be the case unless and until we see initial claims start to spike.

  12. SINGER commented on Oct 17

    EGGS…..up big……

  13. X commented on Oct 17

    There is no inflation for me!
    That’s because I started telecommuting and have 2000 packages of ramen noodles in my pantry. Also, the filtered water out of my fridge is delicious!

  14. stan commented on Oct 17

    The bond market believes the headlines.

  15. michael schumacher commented on Oct 17

    regarding wages and the lack of empirical evidence to show upward pressure. The Fed can say that the sun rose in the west……did it really??

    If they actually have upward pressure on Wages than that would show inflation………which we all know is contained and “in check”

    It does’nt matter that they say they have gone up………show us some empirical evidence.

    Can’t do it and they will never acknowledge it even if it does occur.


  16. Stuart commented on Oct 17

    What do you meant WTF? This is par for the course. You have to manage psychology and perception don’t you know. Can’t tell people there’s inflation whether you believe there is or not….yes, cynical and rhetorical. Combined IQ of the collective financial media might equal my cat…and it just sits there and looks at its food bowl.

  17. stan commented on Oct 17

    MORE… Humana Medicare Prescription Drug Plan for us in 2008 will increase the monthly prem from $14.80 to 27.20. =83.8% increase! All medical (SS, Supplement, PDP) will increase by a total of MORE than the SS cost of living increase. i.e. living on less no matter how you cut it. More WTF stuff indeed!!!

  18. Bob A commented on Oct 17

    Justaguy “I guess everyone is trying to calm the natives.”

    Remember: ABC = Disney = Mickey Mouse

  19. Michael Donnelly commented on Oct 17

    About the SS payments

    I was using the CPI – All Urban, they use CPI – Wage Earner

    CPI-U is about 0.1% higher per year since 1977 than CPI-W. I’m sure AARP isn’t happy about that. The BLS is working on a CPI-E (elderly) to see what a CPI based on those over 62 would look like.

    U based on spending pattern of everyone
    W based on spending patterns of those who earn a wage rather than salary worker

    W vs. U Food at home has a higher weight then out to eat. Medical has a lower weight

  20. rebound commented on Oct 17

    That’s a bummer to see a headline like that on Bloomberg. I enjoy the Bloomberg products as they seem to be primarily in the news business … not peddling hype and entertainment.

    BTW: Wage inflation may not be such a bad thing at this juncture.

    If you are trying to “keep the man down”, then you call this phenomenon “wage inflation”. If you are trying to get elected, you call it rising prosperity and a rising tide raising all boats.

    MS asked a while ago what the good news was going to be before options expiration to cause a market bounce. If I had to wager I’d say that you will hear it first on some new cable business network.

  21. michael schumacher commented on Oct 17

    Market down third day in a row, growth slowing (beige book), housing starts worse in 15 years, CFC share price below 18.

    I almost hate to ask this:

    WHat is the Fed going to do going into the options expiry on friday????

    Something will be done to reclaim 14K on the dow……..artificially of course. They can’t let there buddies who bought all those long calls two weeks ago actually loose money…….OMG can’t let that happen-LOL


  22. million dollar watch commented on Oct 17

    comments deleted

    BR: * SIGH *

    Such inane drivel: boring, silly, pointless comments. Your tiresome nagging has exhausted my patience.

    You get a TIME OUT. Until you learn to play nice with others, your posting privileges are suspended.

  23. Michael Donnelly commented on Oct 17

    WTF is up with cars?
    September data

    Volume of new car sales = -0.6%
    16.3 SAAR to 16.2 SAAR

    Retail sales of motor vehicles (SA) 1.18%

    With quantity down, the revenue must have been driven by price. So prices should be up roughly 1.8% ?

    CPI of new vehicles (SA) says -0.3%

    Enjoy wrapping your head around that.

  24. DavidB commented on Oct 17

    On balance, this suggests the probability of wage inflation is still very real. This is likely to be the case unless and until we see initial claims start to spike.

    Then they’re raising rates soon. Can’t have labor increases. That’s the wicked witch of the west

  25. Kurt commented on Oct 17

    Come on guys just because oil is at $89 that doesn’t mean that there is any inflation.

    Just take a look at the price of gold or T bone steaks — er, wait maybe don’t. LOL

  26. Norman commented on Oct 17

    We need wage ‘inflation’. Let the working men and women have a better life. Isn’t that what this country should be for?

    I could never understand it when Greenspan was stating the evils of wage inflation that the Dems on the committees didn’t rise up and smack him down.

    Further, I just did my son’s tax return. He made $30,000. 21% of that went to state and federal income taxes, social security and medicare, and SDI. Then if the SS and Medicare that his employers ‘pay’ which is really money from his paycheck that he never sees his wages go to about $32,000 and he’s paying 26% of that in taxes.

    All this happens while the high earners stop paying SS and Medicare at about $100,000. Where the hell are the Democrats? If they want to help the little guy/gal then get with it. Cut their SS & MED and let it continue past $100,000.

  27. PeterR commented on Oct 17

    John Williams’s SGS CPI is running at 10.4% per today’s flash update!

    QQQQ bull trap breakout for end of options week?


  28. da_rubberbandman commented on Oct 17

    Social Security Only Going Up 2.3 Pct.

    The Associated Press
    Wednesday, October 17, 2007; 5:50 PM

    WASHINGTON — Social Security benefits for nearly 50 million people will rise 2.3 percent starting in January, the smallest increase in four years. The typical retiree will face the challenge of using the extra $24 to cover higher costs for everything from gasoline and food to medical care.

  29. km4 commented on Oct 17

    Japan and China lead flight from the dollar

    Data from the US Treasury showed outflows of $163bn (£80bn) from all forms of US investments. “These numbers are absolutely stunning,” said Marc Ostwald, an economist at Insinger de Beaufort.

    Asian investors dumped $52bn worth of US Treasury bonds alone, led by Japan ($23bn), China ($14.2bn) and Taiwan ($5bn). It is the first time since 1998 that foreigners have, on balance, sold Treasuries.

  30. Aaron commented on Oct 17

    I don’t know that inflation numbers really look that high yet, but it sure looks like it is coming. The price of oil, gold, the weakness of the dollar, the writing is on the wall.

  31. JJL commented on Oct 17

    With all the terrible housig data, I wonder why the major economic indicators (employment, GDP,consumer spending, psychology) are not reflecting real problems. I ask “Houston, why don’t we have a problem?”

  32. Justin commented on Oct 17


    As far as I can tell we live in the land of Chinese labor being the lowest common denominator. Therefore, pricing power for wages has gone to the way side. This is the conumdrum we presently have before us. Of course the last several years have seen the results, manufacturing, or any low skilled job moving abroad. I often wonder if we all shouldn’t be getting more massages, yoga classes, etc., to kind of keep the money here in the U.S. It would be like a country-wide, “value added good,” when looking at it from a global perspective. Tell that to Joe Six-Pack! lol

  33. Justin commented on Oct 17


    The numbers are soon to arrive! You have to remember that most the employed in constuction, real estate, are self-employed 1099, people, not like years ago when everyone was on salary, so the only data that will pick up the drop is going to be consumer consumption, and since it is such a big pie, it will take longer to wind down…but the trend is down. IMHO

  34. Fullcarry commented on Oct 17

    Geometric (or exponential) growth make managing inflation expectaions impossible.

    People are wising up to this racket and Mises’ crack up should be upon us very soon!

  35. stormrunner commented on Oct 17

    >>>Just take a look at the price of gold or T bone steaks

    Didn’t you get the memo, you’re supposed to substitute T-Bone with ground chuck roast.

  36. The Dirty Mac commented on Oct 18

    “EGGS…..up big……”

    At my local store eggs have nearly doubled in price. The packaged egg whites have not increased in price at all. Without resorting to the obvious puns, I guess maybe the extraction technology is improving(?).

    “Didn’t you get the memo, you’re supposed to substitute T-Bone with ground chuck roast.”

    I don’t think that comments of this nature are fair, at least not yet. My family made a lot of substitutions of this nature in the 1970’s. Very popular TV shows of the day ran episodes based on people eating horse meat (All in the Family) and dog food (Good Times). On The Andy Griffith Show, the Taylor’s ate roast beef only on Sundays. While there is currently a blip in the trend line (due mainly to monetary devaluation and ethanol subsidies), the long-term trend is toward lower food prices relative to income. When “Top Chef” airs an episode about cooking eukanuba I will retract.

  37. Saj commented on Oct 18

    Vacancy rates are also at all time highs. I agree that more people will prefer to rent versus buy. But given the extremely high vacancy rates, shouldnt that put a downward pressure on rents, and consequently, inflation rates??
    I can tell you that rents in La Jolla and San Diego were cheaper than last year, at least in April of 2007.

  38. karl smith commented on Oct 18

    On Owner Equivalent Rent:

    As foreclosures increase that is more likely to reduce the pressure on OER.

    When people loose their house they need a place to stay but the house also needs an occupant.

    What is happening, however, is that the house will re-enter the market at a lower price putting downward pressure on all housing prices.

    I think that OER is likely to moderate significantly in the comming months. However, it will not be as tame as housing prices which are likely to continue their decline and I think that the ‘Old CPI” will begin to moderate significantly, trailing even the Core PCE deflator.

    It will be interesting to see what Shadow Stats has to say about a CPI that is not falling in response to falling housing prices.

    Also, I am still bearish on oil. The fundamentals are just not there for this type of movement. Crack spreads are headed down and global growth is slowing.

    I cannot see how 100 oil doesn’t become self-defeating, touching off a chain of slow growth that brings oil way down.

    I am still bullish on ag commodities for the foreseeable future but that will be the only place we see sustained inflation pressures.

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