The Fed's preferable inflation gauge, core personal consumption deflator, is rising (+1.6% vs. target of +2%), and owners' equivalent rent was troublesome at +2.1%, the most in three years. The TIPS market smells out higher inflation, with the difference between nominal 10-year Treasury yields and the TIPS yield at 2.5% compared to 2.1% during the first 10 months of 2012. If these numbers continue to rise, the Fed will likely be less friendly than many think. Finally, industrial production for September was +0.4%, twice as good as expectations, but the August figure was revised down by -0.2%. Production of motor vehicles and parts fell by -1.5% for the second month in a row. Production of machinery, electronics, computers and mining all rose. The year-over-year increase in the capacity utilization rate matches the slowest pace in two and three-quarters years and follows weakening business capital spending, sluggish durable goods orders and the global manufacturing slowdown -- all of which are adversely influenced by fiscal inertia and tax and regulatory uncertainty. At the time of publication, Kass held no positions in securities mentioned. Profit-Taking in AIG Originally published on Friday, Oct. 19 at 10:24 a.m. EDT.
After AIG's big run, I would expect some profit-taking on the news.
AIG ( AIG) is weaker based on the CEO's statement that the government will likely sell its stake by year-end. This should be no surprise. After AIG's big run, I would expect some profit-taking on the news. But I plan to buy a helluva lot of AIG stock on the secondary offering in November-December period. Indeed, I plan to make it my largest long. At the time of publication, Kass was long AIG.