The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent on a seasonally adjusted basis in February, after rising 0.5 percent in January, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.8 percent before seasonal adjustment.
Naturally, since the monthly data came in below expectations, Wall Street was ecstatic, sending stock futures soaring, which is kind of humorous since inflation - as Money Daily has been pointing out for weeks - is not the main issue facing the economy, but the opposite, dis-inflation or deflation, the natural outcome of Trump policies of tariffs, deportations, and government downsizing which continue to be implemented.
These policies will take months to be realized, possibly not until late summer or fall, but deflation will be an issue along with elevated unemployment. Wall Street traders, after two consecutive days of losses and more than a month of down-trending, doesn't care to look beyond the ends of their noses, but instead are seeking any kind of signal to buy the deep dip, and it appears the benign inflation data is the ideal tonic.
Adding to the euphoria was the House on Tuesday passing a stop-gap funding bill (CR) that will keep the government operational through the end of the current fiscal year (September 30). The kicker there is that congressmen, investors, and mainstream media wind-up dolls will express great dismay as Trump and Musk (remember, these are businessmen) continue to cut budgets and not spend all that's been appropriated, effective coming in "under budget", the effect being fewer federal employees, fewer government contracts, and a general squeeze on money being pumped into the economy, the hallmark of every administrations since Ronald Reagan.
While today's stock burst may be followed by another round of gleeful cheerleading when PPI is released tomorrow, the overall effect will be short-lived. Institutions have ben taking profits for weeks and months, stocks will remain overvalued for a while, until GDP gets reported the last week of April and shows that the first quarter was contracting and the U.S. is already in a recession.
That's the general prognosis, but one worth keeping in mind as the Wall Street drones, which know only how to buy stocks, keep pushing the "all's well" narrative.
Stay informed and don't be fooled. The primary trend has reversed. Bear market conditions are prevalent.
A half hour before the open, Dow futures are up 305 points, NASDAQ futures ahead by 335, and S&P futures sailing along, up 65.
Gold is bid at $2,925, but the bigger story may be silver, which is headed toward the October highs, currently trading at or near breakout levels above $33.45.
At the Close, Tuesday, March 11, 2025:
Dow: 41,433.48, -478.23 (-1.14%)
NASDAQ: 17,436.10, -32.23 (-0.18%)
S&P 500: 5,572.07, -42.49 (-0.76%)
NYSE Composite: 19,052.13, -150.25 (-0.78%)
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