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IS THIS WHAT PASSES FOR STABLE?

|Includes: ANF, BAC, C, DBA, DBB, DELL-OLD, EEM, EFA, EPI, EWA, EWG, EWI, EWJ, EWY, EWZ, FXE, FXF, FXI, FXY, GDX, GLD, IEF, IWM, IYR, JJCTF, JJGTF, QQQ, RSX, SLV, SPDR S&P 500 Trust ETF (SPY), TGT, UUP, XLB, XLF, XLI, XLK, XRT

Whew! This is the first day in a while where things were at least comprehensible. Markets rallied early on better news from Target (NYSE:TGT) but on closer inspection, earnings were improved by previous stock buybacks and cost cutting. For the most part this is financial engineering at its best. Dell's (NYSE:DELL) earnings last night were horrible, Analog Devices (NASDAQ:ADI) earnings also missed and the Abercrombie & Fitch (NYSE:ANF) report caused the stock to drop 8%.

PPI data came in hot today with an annual core reading 2.5% which was much higher than expected. With economic growth slow and the PPI hot, this is the essence of stagflation. Beyond this, there wasn't much else except for energy inventories which were much higher than forecast. After an early selloff, oil prices rallied to close higher. Perhaps much of the rally was due to a slumping dollar. Since commodities are priced in dollars, this is something you should expect. And on cue, gold, silver and other base metals rallied. Bond prices were also higher.

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