NEW YORK (TheStreet) -- Doug Kass of Seabreeze Partners is known for his accurate stock market calls and keen insights into the economy, which he shares with RealMoney Pro readers in his daily trading diary.
Among the posts this past week were items about inflation and Baxter International.
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Parsing the Data
Originally published on Saturday, March 28, at 9:50 a.m. EDT
Inflation in February as measured by the PCE deflator, the Fed's preferred gauge more so than CPI, rose +0.1% month over month both headline and core and +0.9% and +1.1% year over year headline and core, respectively. The near-7% increase in the CRB index in February was not at all captured in this figure, as it will take some time to work its way through (mostly food). Also, housing is a much smaller contribution to PCE than CPI and therefore doesn't fully reflect the near-3% gains in rents. PCE has a higher medical care component, which has recently been more benign of late.
The Fed doves will worry about disinflation; the hawks will know it's backward-looking. The labor market as measured by the unemployment rate is tighter than thought, and rates shouldn't be at zero anyway at this stage of the cycle, let alone still conducting QE.
Loading Up on Baxter Long
Originally published on Saturday, March 28, at 8:48 a.m. EDT
In an attempt to boost innovation, raise profitability and reward shareholders, Baxter (BAX) has announced that the company is separating into two parts -- one for developing and marketing biopharmaceuticals, and one for medical products. Additional benefits include a greater management focus on the separate franchises, as well as the ability to more effectively commercialize new and existing offerings and the flexibility to pursue respective growth. The split will come in the form of a tax-free distribution -- of new publicly traded stock in the biopharmaceuticals company -- to Baxter shareholders. The transaction is expected to be completed by mid-2015. The share price of Baxter initially climbed to about $76, and it has since traded down a few dollars.
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