Wall and Broad: Consumer prices zoom in U.S., Fri, Oct. 14, 2005, 9:23 AM

From www.billcara.com

Total CPI in the U.S. for September was anticipated by Wall Street to be +0.9 pct Month over Month. Instead it was +1.2 pct. But rather than run for the hills, the TH’s have spun some nonsense that the War On Inflation is being won. They point to a number called “core”, which strips out energy, food and all other items we have to buy daily, and state proudly that “core” was just up +0.1 pct M/M.

I told you this would happen. I told you that Wall Street and its bought-and-paid mass media just can’t get it right.

In fact, to point out just how much these people lack intellectual honesty and integrity, I recently pointed out that during the 2000-2002 period (“The last great bear market”), the same people would urge the public to ignore “core” and focus instead on Total CPI. That’s because, during that time, the Total CPI number was falling M/M faster than Core.

Retail sales in the U.S. grew by +0.2 pct M/M, but the TH’s tell the audience that this disappointingly low number ought to be ignored because ex-autos it was really +1.1 pct M/M, which is a highly impressive number that “proves” that the U.S. economy is healthy and robust, yada, yada.

Sometimes, I want to puke. But that’s because I treat this stuff seriously. Capital markets involve real money. It is non-fiction. Instead we get crapola along the lines that the world is favored by a “Goldilock’s Economy...not too hot, not too cold.”

I ask you, who is the village idiot who came up with that slogan for the Sell Side.

Dumbing Down of America. You allow yourself to fall into that trap, and shame on you.

The facts are this: Inflation continues to rocket higher in America. Retail sales in America are slowing, but not yet in terrible shape. Unless interest rates and energy prices recede from their rising tide, all boats tethered to the dock will get pulled under.

That last analogy will make my wife smile as she reads it.

Years ago, I had just bought a new sailboat. Unknown to me, and others, was the fact that the engineers had designed part of the plumbing in reverse, so that the overflow was supposed to exit the boat but didn’t because the pipes were reversed. That meant that if, as, and when the waterline ever reached higher than the outlet on the side of the boat, it would be allowed into the boat. So after an all-day drive from Atlanta to just north of West Palm Beach Florida, where I kept my boat at the time, arriving with two young children asleep in the back of the car, we arrived at 2:00am to a sunk boat. In my absence, the inexperienced marina crew had tied my boat tight to the dock before a storm that caused a tidal surge of about four feet. That rise of water and the tethered boat worked together to sink my boat.

So there you have it: life is full of experiences that you can learn from, which in fact you ought to learn from if you are going to avoid problems in the future.

With my boat, I had relied on the expertise of boat designers and engineers who were the recipients of worldwide awards for excellence as well as a marina crew who were supposed to know their job. They failed me. I learned to rely on myself.

Four and five years ago, the TH’s who today are telling you to ignore Total CPI and rely on Core are the ones who were telling you to ignore Core and focus on Total CPI. They hold themselves out as experts.

You have to figure out these things for yourself. Your common sense becomes more acute with experience. Mine is telling me that consumer prices have zoomed this month, and last, and the ones before that, and that prices facing my friends and associates in other countries are rising quickly as well.

Of course, my common sense is aided by the excellent charts from Haver Analytics below.