Despite last week’s rally and moderation of the declining slope which began on October 15th, I am still bearish. With the impending FOMC rate decision and the bullish views that intervention will juice stock prices, it’s not easy to be bearish. But that’s what I am seeing and again this week, I gave more DOWN signals(181) than new UPs(89).

The economic data is all over the map with GDP strong, ADP jobs stronger, etc. and other things like housing and consumer data looking weak. Can you say stagflation? The economy is weakening - that is hard to dispute. We all know we have inflation whether the government data wants to report it or not.

It’s been interesting to see the discussion of inflation effects from food and oil lately. Finally the people who keep harping on the fact that input price inflation is not being passed onto consumer inflation are having to deal with the inevitable impacts of that argument: margin compression. If your costs keep going up and you don’t pass it on, you are by definition less profitable. If you finally start passing it on you may improve margins but you will have inflation and eventually, demand destruction/declines in revenue growth. Overall, it’s a tough situation for producers and consumers, employers and employees, and yes, it’s tough on the Fed. I am glad they had two days to discuss everything and I hope they had a contentious debate. If they didn’t and found it really easy to make their decision, they are clearly not living in my world.