Important Inflation Gauge on Tap

Last night, Asian shares sank further, WTI crude surpassed $103 and gold shot past $976 as the commodity price surge progressed. The dollar continues to sink, and Ben Bernanke offered up some new concerns Thursday afternoon when he said a few American banks could fail. Thanks Benjamin, the masses uttered in chorus as they rushed to their local branch to gather up their very own Benjamins. By the way Ben, nobody believes you when you quote Bush, almost simultaneously in fact, in saying the economy should continue to grow. I hate yes-men!

On Tap for Friday

January Personal Income and Outlays are scheduled for report at 8:30 EST. Bloomberg's consensus of economists forecasts both data points will show 0.2% growth. The market should be apprehensive of both figures. We would prefer to see moderate income growth, offering a non-threatening wage inflation scenario. Personal consumption of course will help investors gauge how well the consumer is holding up. In January, weekly same-store sales data recorded by the International Council of Shopping Centers was relatively weak, so the same information should be found in personal outlays.

Perhaps the most important piece of data from the report will arrive in the PCE Deflator, the pricing gauge viewed most important by the Federal Reserve. The Fed targets a growth rate between 1-2%, but will likely tolerate a higher rate if necessary in times of economic strife, according to member white papers. The market probably doesn't remember that fact though, so watch out if a hot figure shows up.

After sad news from both Philly and New York area manufacturing, the National Association of Purchasing Managers - Chicago, is expected to show the Midwest teetering on the fence of contraction and expansion. Bloomberg's consensus is projecting a measure of 50.0 for February.

The University of Michigan's Consumer Sentiment Index is anticipated to reach only 70.0, after posting a reading of 69.6 last time around. The Conference Board's measure of consumer attitudes missed the mark by far earlier this week, so the Michigan figure is looking hopeless as well. The market has bounced from its January lows, so there's some possibility of sentiment stability, but we wouldn't bet on it. It seems sentiment was impacted by recent bond insurer concerns.

With commodity prices crazy volatile lately, the Farm Prices Report at 3:00 p.m. Friday should not be overlooked either.