Between gas, rent and health care, official CPI rose 0.3% in December and 2.1% from a year ago.  It’s the highest since June 2014, and just a tad below the 2012 highs.  Of course, the official CPI data are as legit as employment data — which is to say “Not!”  For more, see John Williams’ explanation on his excellent Shadow Government Statistics.

Even these deliberately deflated data illustrate a growing problem with the financial status quo: higher inflation begets higher interest rates, which will have a chilling effect on profitability, valuations and – dare we say it? – the fiscal soundness of every over-indebted corporate, government, and private entity on the planet.

The twin remedies for higher stocks prices — the falling yen and higher oil prices — are running out of maneuvering room.  The plates might still be spinning, but the clock is ticking.

continued for members…

VIX has kept futures in the green overnight… …with a little help from USDJPY snapping back into its falling white channel……even as CL gives up gains from yesterday’s ridiculous ramp.  I expect this to be oil’s last hurrah before the big swoop coming in the next few weeks.

I priced some options yesterday on an inverse oil ETF – SCO.  With the underlying around 32, the Feb 34 calls were selling for 1.80.  They’re at 2.35 this morning, with plenty of room to run if CL falls into the 40s or 30s — which I anticipate it will do over the next month or two.

Please note this is not a trade recommendation.  I know next to nothing about this ETF other than its mention in an Investopedia search on inverse oil ETFs.  It has little time left until expiration, and options are obviously very volatile investments.  I view it as a very speculative, short-term play for traders with high risk tolerance.

Futures bounced back above the red channel top for the umpteenth time…

…but, it doesn’t change our outlook for SPX.