Trade Deficit and Import Price Inflation

The Trade Deficit, like most economic data can be spun however you want it to appear. You can say it's better because it came in at $45.8 billion vs $47 billion in January, or you can say it disappointed at $45.8 as consensus was for $44 billion.This is why earnings and economic reports can look so different in the media, one headline saying there's improvement, another saying the Trade Deficit was a huge disappointment.

The one thing in the report and what has been a material fundamental factor for well over a year and probably will be the biggest underlying fundamental factor this earnings season is the continued price inflation. You can't really argue this one to much, the Import Price index came in at 2.7 from 1.4 previously and consensus of 2.1-Lose, Lose.

This will hit every sector in the economy in one way or another and I think it will be a central theme in earnings this quarter. Just another report in a long line of reports confirming what we've known for a long time and something the Fed ignored as long as possible, Inflation is here and I don't mean as if it just arrived in the manufacturing sector, it's so embedded now that it's creeping into consumer prices.

That's the Fed's easy money, Chinese Finger Trap that will have to be unwound and in the process may create the first secular bear market in equities.