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The inflation bogeyman just won't go away. Despite a moment's respite on Thursday, Friday's

Consumer Price Index

delivered the kind of surprising bad news that has become altogether unfamiliar in this bull market.


James Padinha smartly outlined for the inflation bears in his column today, the rise in CPI is precisely what the


is not looking for in this market. For the inflation bulls, like myself, the question now becomes: Is this an aberrant reading, or are we finally starting to see the economy wiggle loose from the blissful low-inflation world of the past few years?

Looking at the numbers, the most troubling reading is the sharp rise in retail prices. (Along with Padinha,

Beth Roy and

Dave Gaffen both did a great job getting into the meat of the CPI report and bond market reaction with their stories today.) This displays the first real fissure that favors the wealth-effect crowd. This crowd argues that, with stock market values soaring, people are feeling their oats. Therefore, the folks feeling a little richer are less discriminating in their purchases. That enables the stores to push prices up a little more sharply, giving us a little more inflation.

Looking at the CPI, the sharp rise in energy costs (driven by surprising leaps in gasoline prices) can be expected to dissipate. But that won't be enough to quell percolating inflationary fears. Next month's CPI now looms large. Another indication of rising prices and more conviction about a wealthy-feeling consumer getting loose with the cash, and the inflation bears will turn this recent victory into a rout.

Things to watch in the coming weeks will include price-sensitive commodity stocks such as the coppers. Also, rate-sensitive stocks like the financials will offer a good indication of sentiment. Tuesday's


meeting shouldn't offer a surprise, merely an indication that the Fed is paying attention.

Finally, as the inflation question festers, investors may become tempted to look at other potentially problematic issues. The war in the Balkans is not going well, and though the market has largely ignored that issue to date, a prolonged string of tough trading days might bring that problem into sharper focus. Inflation and missiles. These are the kinds of things that get the market's attention during the barren time between corporate earnings seasons. And we're still about two months shy of the next batch of earnings numbers. Fasten your seat belts.

Random Menace:

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, like my


, are teasing me. They get the home-court advantage and then promptly lose it.


look too strong.


Many readers have asked why we have not done more to cover our own recent initial public offering. Essentially, we'd like to cover such an important story, but we have to be mindful of certain rules and regulations that govern the IPO process. In the weeks and months leading up to the IPO, the


enforces a very rigid "quiet period" rule that bars company's from saying anything about the company that isn't contained in the prospectus filed with the SEC. Following the IPO the company enters a 25-day extension of the quiet period. This is a less rigid, though still important rule to adhere to.

Thus far we've handled coverage of our IPO and share movements by placing that information in the market reports and roundups. We've kept it spare. During the next three weeks we are going to work on developing a policy concerning coverage of

as a company and its corresponding stock. As many of you can appreciate, this is a complicated issue, and one that we take very seriously. If you have some ideas and would like to offer up suggestions, don't hesitate to email me at When the time comes, I will let everyone know about the new ground rules.

California Dreamin':

If you haven't checked out new Silicon Valley columnist

Adam Lashinsky, I suggest that you do. His columns do a great job deciphering the tech world for investors. On Thursday morning he correctly

predicted that Oracle would find itself facing some rough sailing. More than 50-million-shares-traded later, he was correct. Just a taste of things to come from Mr. Lashinsky.

Best Item This Week:

Cory Johnson's

column on the Internet IPO myth. Perfect.


Have you checked out

Andy Serwer's riff over on


? Clever and well-written, I heartily recommend it. Now if I could only think of a nickname for this guy.