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MARKET COMMENTApril 17, 2007 Looking at inflation data through rose colored glasses has been the theme for some time now. That didn’t stop today since inflation was reported as “calm”, “contained”, “tame” [pick ‘em] and that’s what bullish investors and headline writers chose to focus on. So with the so-called “core rate” just fine thank you, stocks continued to rally. Ignoring that nasty food and energy component to my mind is the real “inconvenient truth”. But I’m not alone in this thinking since Irwin Kellner spoke to it more eloquently than me HERE. You can’t make this stuff up but who are we to fight the momentum? When someone smart first coined the phrase “more money than brains” they really were on to something. Today I noticed especially the rally in homebuilders as reported housing starts increased by .8%. This is interesting since there already is a glut of inventory so why add to the problem? The only thing I know for sure is that in order to make money, homebuilder’s must continue building new homes. Next they must sell them. That’s the rub. But with rose colored glasses on you need only focus on the first part. There was a lot more talk about subprime lending issues HERE and HERE today. It’s a “situation” and not a “problem” like a Pelosi-type thing. Gasoline futures fell 3% today as an important refinery from Sun is expected to come on line by Friday. Energy traders are a skittish group and are quick to pull the trigger one way or another. Tomorrow we get inventory data and we’ll see how that affects things. Now we get into the teeth of important earnings announcements tonight and the balance of the week. Let’s see how it all plays out as the expectations game proceeds. We’ll be back tomorrow with a more detailed review since things could change dramatically with surprises one way or another. Have a pleasant evening. Disclaimer: Among other issues, the ETF Digest maintains long or short positions in: XHB, KBE, DBE, UDN and GLD.
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