Everyone who drives knows that gas prices increased more than 3% month-over-month  – the official, seasonally adjusted numbers from the BLS in this morning’s CPI report.  Data put together by non-governmental sources confirms it.But, folks like GasBuddy and AAA aren’t responsible for cost of living adjustments for millions of Americans.  So, unlike the BLS, they have no incentive to fudge the numbers. Maybe they’re also aware that gas stations don’t allow customers to pay the “seasonally-adjusted” price.

Using the EIA’s (also fudged) numbers, gas prices were up 6.2% for April — more than twice BLS’ goal-seeking 3%.  So, the BLS was able to report 0.2% instead of the 0.3% expected for April CPI.Similar games are played, of course, with respect to shelter (+3.4% YoY,) medical care (+2.2%) and vehicles (-1.6% new, -0.9% used.) I’ll pick on vehicle data this morning, as it illustrates another shortcoming of the BLS approach.

Consumers buy food and gas every few days, while they tend to hold on to vehicles for several years at a time.  Even if vehicle prices were to drop, that savings wouldn’t flow through to a consumer until they purchase a vehicle.  When they did, of course, they’d be hit with higher interest rates than were in place last month or last year.

The algos don’t care much about the veracity of the numbers.  Futures are up 8 points ahead of the open — another overnight VIX bashing that has it below the SMA200 and about to test the .886 Fib and channel midline at 13.23ish.  While it’s nice to nail a forecast, it’s distressing to see how easily the algos can be manipulated. The flip side of under-reporting inflation, of course, is the effect it has on currencies and interest rates. With “no” inflation pressure, interest rates have receded from 3% — sapping some of the dollar’s strength. continued for members…

This, of course, saps some of USDJPY’s momentum — leaving much of the stock levitating to VIX and oil/gas.As discussed yesterday, SPX should test the 2.24 this morning.  It’s important for the bulls for it to hold.  It’s important for bears that it fail. My gut tells me it’ll reverse here, but I remain open to a breakout only because I recognize how easy it would be for VIX – already off 30% in the past week – to get hammered to below support.  The line in the sand is SPX 2710ish.

UPDATE:  9:57 AM

Here’s the line in the sand.  If SPX and VIX can reverse here, we should get some good downside going.  If not, time to go long. Bears should be encouraged by the fact that NKD — the poster child for central bank stock manipulation — hasn’t broken out.  With the SMA200 coming up fast, we should get a reversal here.UPDATE:  11:18 AM

SPX is breaking out, mostly due to VIX breaking down.  One should be long here, with stops back around 2710ish.  Confirmation comes with new highs at SPX 2727.49 and ES2718.5, and the next upside targets are SPX 2742 and ES 2745.