We might be entering a period of negative core inflation while there's asset price inflation?

Top Day Rec

11.17

The Producer Price Index comes in at .3 while the core rate (ex food and energy) comes in at -.6%. Inflation usually lags the business cycle. Could we now be entering a period of negative core inflation while at the same time there’s asset price inflation?

Yesterday, the Fed Chairman did such a good job of describing the head winds that the economy faces that markets are actually slightly lower this morning. He also did something that was out of character, he talked about the dollar and that is higher this morning.

Nov 16	08:30	Retail Sales	Oct	0.7%	0.9%	-1.5%
Nov 16	08:30	Retail Sales ex-auto	Oct	0.1%	0.4%	0.5%
Nov 16	08:30	Empire Manufacturing	Nov	20.5	30.00	34.57
Nov 16	10:00	Business Inventories	Sep	-1.0%	-0.7%	-1.5%
Nov 17	08:30	Core PPI	Oct	0.2%	0.1%	-0.1%
Nov 17	08:30	PPI	Oct	0.7%	0.5%	-0.6%
Nov 17	09:00	Net Long-term TIC Flows	Sep	$30.0B	$35.0B	$28.6B
Nov 17	09:15	Capacity Utilization	Oct	70.5%	70.8%	70.5%
Nov 17	09:15	Industrial Production	Oct	0.2%	0.4%	0.7%
Nov 18	08:30	Housing Starts	Oct	585K	600K	590K
Nov 18	08:30	Building Permits	Oct	585K	580K	573K
Nov 18	08:30	CPI	Oct	0.2%	0.2%	0.2%
Nov 18	08:30	Core CPI	Oct	0.0%	0.1%	0.2%
Nov 18	10:30	Crude Inventories	11/13	NA	NA	1.76M
Nov 19	08:30	Initial Claims	11/14	510K	504K	502K
Nov 19	08:30	Continuing Claims	11/13	5580K	5600K	5631K
Nov 19	10:00	Leading Indicators	Oct	0.5%	0.4%	1.0%
Nov 19	10:00	Philadelphia Fed	Nov	12.0	12.0	11.5

Current views, speculations and suggestions

(good till close of business today). These are technical in nature only, not fundamental.

Dec ES: pos with support at 1095.00

Dec NQ: pos with support at 1789.00

Dec Mini Dow: pos with support at 1027

Dec Gold: pos with support at 1125.00

Dec Silver: pos with support at 17.76

Dec Copper: potential reversal day

Dec Yen: potential reversal day

Dec Swiss: potential reversal day

Dec EC: potential reversal day

Dec Canadian: pos with support at 94.46

Dec BP: potential reversal day

Dec Aussie: potential reversal day

Jan Crude: pos with support at 77.70

Jan Soybeans: neg with res at 10.17

Mar Wheat: pos with support at 5.68

Dec Ten Year: pos with support at 119.05

Dec 30 Year : potential reversal day

Mar Eurodollar: po with support at 99.62

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International Markets

Dec Bund: pos with support at 121.38

Dec Dax: pos with support at 5750

Dec NKD pos but outside daily support at 9756

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N.B.: if you initiate a trade using ANY of these numbers use a STOP at least equivalent to 2 ½%. Repeat: use Stops. Don’t think about using Stops. Use Stops. Some find it appropriate to look at the margin requirement and use that as a stop or if it’s a steep initial requirement, use half.

Charles Kespert

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