An insult to reality…
That is what this mornings inflation data did to every intelligent person in
this country. For the Government to claim that energy costs dropped in April is
of course untrue. But, the mathematical model that the Government uses to arrive
at their final numbers is slow to react to reality. It will take time for the
real world inflation to work their way into the Governments statistics.
But where this presents a large and potentially catastrophic problem is that
all monetary decisions by the Government and corporations are all based on the
‘official’ data. So with the data today saying inflation dropped a tick, when in
reality it has ramped up by a rather large amount, creates a false read on the
real economy… at least a lagging read on it. So as millions of Americans who
rely on Social Security are hopeful of an increase in their checks they are
going to get very little adjustments to their income. In the real world they are
spending much more in order to get by everyday.
Where does that lead? It leads to more and more people spending less on
discretionary items as money has to go to heat, electricity, food, and gasoline.
It is no wonder that the US Government has started running radio advertisements
for the food stamp program. A local radio station in my area has begun running
30 second commercials for food stamps, in the commercial (or public service
announcement), a soft spoken woman speaks about the hardships of making ends
meet. And that there is no shame in applying for food stamps to help pay for
food. The same government that is telling the American people the the
fundamentals of the economy are strong is telling them how to apply for food
stamps. Am I the only one that sees a problem with this?
The media is jumping all over the reported inflation data from this morning
and making statements about how it was not as bad as thought. Tell that to the
175 million vehicle owners in this country that inflation is under control. And
tell them that when they go to the food store and are paying substantially more
for many food items now. Thank goodness there were some smart people in the
market today, they know the real story. It is only the people that are easily
influenced by the media and the CNBC stock pumpers who are the ones who keep
buying over priced stocks in a declining economy.
Today’s very quick reversal in the market was a potential turning point. When
watching the S&P futures on a 5 minute chart today it was very clear that
the morning rally was losing volume as the day went on. Then, as bids started to
dry up as the indices reached resistance levels again the volume picked up
rather quickly and the selling started. And the volume on the selling continued
to rise all the way into the close as the market kept selling down.
Momentum stocks were the first to take a whack and started a fairly
impressive sell off in the span of only 90 minutes.
