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EScroogeJr (< 20)

expect a mini-rally tomorrow

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April 15, 2008 – Comments (5)

CPI data will be released tomorrow. There is little doubt that the Bureau of Labor Statistics will say that inflation does not exist, and that the market will use this pretext for a mini-rally, not because it believes the falsified numbers, but because BLS's phony statistics will send the message that another rate cut is on the way.

5 Comments – Post Your Own

#1) On April 15, 2008 at 8:23 PM, mandrake66 (84.92) wrote:

It won't be just the CPI numbers. After GE, a lot more fear started to get priced in. Now that Intel has met its reduced expectations, it all depends on IBM tomorrow morning. If anything upbeat can be found in IBM's earnings, the market will rally sharply. If their earnings are a disaster, we're on the slope down again.

Personally, I think people will see flowers and sunshine in IBM's numbers. GE had too much exposure to finance and healthcare. IBM and Intel are much simpler and far more predictable. 

It's basically all on IBM for tomorrow. 

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#2) On April 15, 2008 at 9:36 PM, Imperial1964 (97.89) wrote:

Hmm...  I think I'll disagree.

The PPI came in rather hot.  Especially when you look at crude goods, up 8% over last month! 

http://www.bls.gov/news.release/ppi.nr0.htm

I can't believe the market is up today.  Assuming the trends in PPI don't reverse in upcoming months, this will have to either pass through into the CPI or collapse corporate profits, or most likely both.  Not good for stocks.

It'll be interesting to watch the CPI in upcoming months to see whether the consumer or businesses will eat most of the inflation in input costs.

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#3) On April 15, 2008 at 9:54 PM, EScroogeJr (< 20) wrote:

"this will have to either pass through into the CPI or collapse corporate profits"

Oh, the BLS will manage this little problem. They will do their hedonic adjustments, apply their improved geometric-mean formulas, correct for the formula bias, substitution bias, outlet bias, and come up with the required number. Inflation does not exist if BLS does not admit it, right?

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#4) On April 16, 2008 at 5:55 AM, DemonDoug (84.09) wrote:

Scrooge, there are times when you absolutely infuriate me, and it seems to me that sometimes you write stuff just to get a rise out of people.  However, I've never seen an investment philosophy based on the government lying and socializing losses.  Usually it's ancillary, like inflation due to these things, but you are like - the government is going to come in an prop up banks and financials and housing.  And I'm going to invest in these things because the government is stupid so I might as well ride their gravy train.

And hot damn it man, it's such an outlier philosophy, there's a part of me that almost wants to go with it.  Only problem with that is that I still feel like it's betting on tech in 2001, still on the way down, very hard to catch counter-trend rallies.

But man oh man, you are dead on when it comes to analysis of the goobermint, so I would imagine that you could actually make money with that investing thesis.

I'm with mandrake.  Overnight markets are up a little, so IBM's earnings report will basically push the markets in whatever direction it leads.  I have a feeling a mini-rally tomorrow is within reason. 

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#5) On April 16, 2008 at 8:37 AM, EScroogeJr (< 20) wrote:

"However, I've never seen an investment philosophy based on the government lying and socializing losses."

Thanks, Demon, I'm just trying to stick with what works :)

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