If It Walks and Talks like Inflation

Guess what, gente, it is an election year. And last time I heard, voters still care about gasoline prices. And many will care about heating oil prices. And others about getting no interest on savings. As the playas wait for more rounds of QE, they might consider that gasoline prices have been pile driving higher even before ethanol is rationed. Elsewhere both Brent Sea and landlocked Cushing oil have put on a $20 plus price spike, even in the midst of clear economic softness. Grain and food I have posted on repeatedly and it can only be described as a crisis. Trillia reports rent are now up 5.3% over the last year. Rent is supposed to be factored into the CPI. Sure, blame it on dog ate the homework issues, but if it walks like stinkin’ inflation, talks like stinkin inflation, and looks like stinkin inflation, it probably is stinkin inflation.

11:58 PM California spot gasoline prices soar more than 10% to $3.23/gal. in the wake of the fire (now reportedly out) at Chevron’s (CVX) Richmond refinery. California spot prices help determine retail prices, currently at $3.86/gal. for the statewide average and higher than this time last year; prices could climb at least another $0.40, OPIS analyst Tom Kloza says.

As I thought, we were witnessing a big QE Wizard of Oz save the world short squeeze in a thin market. But there is no more of that fuel in the tank. QQQ short-interest is now its lowest since October 2000 and SPY short-interest its equal lowest since October 2007. There was a 45% and 30% plunge in QQQ and SPY short-interest in the last six weeks alone.

There is no money going into stocks, just frail volume residual short covering, and algo central bank headline rumor pulses. Bring up any stock other than the biggest trading names, and you will see little stock bid or offered. Of course because of the HFT and algos nobody dares show their hand or they get abused. Should somebody larger than small retail head for the exits in an environment where bogus rumors are ignored, the holes and fault lines in this market should become glaringly apparent. This animated chart shows the build up of HFT over the last five years. This is nothing more than renting prices for a few minutes.

source: Zero Hedge

A look at the bond bubble, this time the junk bond market. Gotta get yield, suckah.