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I believe a quote from a song by the great Fleetwood Mack is very appropriate this morning:


“Tell me lies
Tell me sweet little lies
(tell me lies, tell me, tell me lies)
Oh, no, no you cant disguise
(you cant disguise, no you cant disguise)
Tell me lies
Tell me sweet little lies”


Oh boy what a treat.  Not only is it Friday, but what a CPI number.  As I sat in my car, driving to work and listing to the simulcast of CNBC on XM I was thinking about what number I wanted to see when the CPI was announced at 8:30 AM.  At first I thought, hey the lower the better, let’s go with 0.1%.  But then I came to the conclusion that there’s no way on Earth that anyone would believe a number that low, so I would be happy with an increase 0.2%, which is in line with what analysts are looking for.  Then BEEP…the number came out and Rick Santelli said that the February CPI was flat.  WHAT?!?!?  Wow, what a sweet number.  I’m never one to believe in conspiracies.  Usually they are absolutely absurd, especially when they involve the government.  I usually just think that the government is inept rather than blatantly lying, but man oh man what a convenient number to come out with heading into the Federal Reserve’s meeting next week.  Come on, inflation is flat.  That’s just ludicrous.  HA HA HA.  Tell me another one.  The price of gas is sitting at a record high, yet the CPI report showed energy prices fell 0.5 percent in February.  Grain prices are skyrocketing.  Every time I go to the grocery store I have to pay more, but oh no there’s no inflation.


Adding to this, according to a report that was released this morning, Euro Zone inflation hit a new record high of 3.3% in February.  Strangely, the European inflation report showed that energy prices there soared 10.4% in February versus the same period a year ago (versus a 0.5% drop according to the U.S. CPI).  The European Central Bank was already a lot more hawkish than the U.S. Federal Reserve since its mandate is much more geared towards inflation fighting.  Its target inflation rate is slightly below 2%.  This pretty much seals the deal in my mind that the ECB will not cut rates at its next meeting like some had believed it might.  If they do stand pat and the Fed lowers rates by 0.75%, watch out the dollar’s going to get slammed.  You know what, that’s fine with me.  I have been positioning my portfolio to benefit from the weak dollar.


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