Kass: Not-So-Little Lies in Inflation Data

Bryan's weighted median CPI, like the trimmed mean PCE rate, takes away monthly outlier inputs. Arguably, moves in the commodity markets are growing ever more violent (in either direction), stimulated by the proliferation of large capital pools that manage commodities as well as increased mandates by institutional investors to increase their commodity exposure.

The level of inflation over the last 12 months was +3.7%, according to the Cleveland Fed -- considerably higher than the other inflation gauges that are dished out to investors by the government. (CPI was 2.5%; CPI less food and energy was 2.6%.) Here is the one-month median CPI since 1967.

If Chairman Bernanke and the Federal Reserve increasingly focus on the Cleveland Federal Reserve measures of inflation, look for Bernanke to be more hawkish on Wednesday than is generally expected. And look for the capital markets to feel the pain.

One Stock Rocked

This morning, India's aluminum and copper producer Hindalco Industries announced its plan to acquire Canada's rolled-aluminum products maker Novelis(NVL Quote) for $6 billion. Hindalco will pay $44.93 per share vs. Friday's close of $38.54 per share. I wrote last Monday that I had heard Novelis was a candidate for acquisition.