Not a Great Day

Overnight trouble continued in the MENA region, Egypt, Morocco, Tunisia, Libya, Sudan and Yemen saw continued clashes, adding to the trouble, the German embassy in Sudan is now burning as well as new trouble in Lebanon where a KFC was set ablaze. This unrest that started in Egypt over a Youtube film depicting Mohammed as a pedophile is literally engulfing the region.

Crude shot up all night, it moderated a little just before the open, but is still elevated. While the inflationary expectations of QE could be blamed, the fact is Gold has always performed far better under  QE regimes than oil and oil is showing about 400% more relative strength so it seems clear the geo-political tension in the area is effecting oil.

Crude Futures overnight and in to the open

USO is showing 3C confirmation of the gap opening whereas GLD is not.

It seems the uptick in oil couldn't come at a worse time as CPI was released this morning...

Released On 9/14/2012 8:30:00 AM For Aug, 2012

Prior Consensus Consensus Range Actual CPI - M/M change 0.0 % 0.6 % 0.2 % to 0.9 % 0.6 % CPI - Y/Y change 1.7 % 1.7 % CPI less food & energy 0.1 % 0.2 % 0.1 % to 0.2 % 0.1 % CPI less food & energy - Y/Y change 2.2 % 1.7 % After yesterday's Producer Price Index saw the largest increase since 6/2009, today's Consumer Price Index saw a similar jump, the highest in 2 years. When broken down, it's clear that rising gasoline prices are the main culprit followed by food inflation. Retail sales, also released this morning missed expectations... Released On 9/14/2012 8:30:00 AM For Aug, 2012 Prior Consensus Consensus Range Actual Retail Sales - M/M change 0.8 % 0.8 % 0.3 % to 1.5 % 0.9 % Retail Sales less autos - M/M change 0.8 % 0.8 % 0.3 % to 1.5 % 0.8 % Less Autos & Gas - M/M Change 0.9 % 0.4 % 0.3 % to 0.8 % 0.1 % This makes 5 of the last 6 prints a miss of consensus. Inflation at the worst possible time... Adding to the string of bad news, Industrial Production released just before the open also missed... Released On 9/14/2012 9:15:00 AM For Aug, 2012 Prior Consensus Consensus Range Actual Production - M/M change 0.6 % -0.1 % -1.0 % to 0.3 % -1.2 % Capacity Utilization Rate - Level 79.4 % 79.2 % 78.6 % to 79.5 % 78.2 % Manufacturing - M/M 0.5 % -0.2 % -0.5 % to 0.2 % -0.7 % This is a large miss not only to consensus, but since July's +.5% print making this the largest drop in Industrial Production since March of 2009! This is also the biggest miss to consensus since December of 2008.  Overall capacity utilization slipped to 78.2 percent from 79.2 percent in July. The consensus forecast 79.2 percent, making this the biggest drop in C.U.  for 2012 and the biggest miss of expectations in16 months. It seems things are deteriorating a lot faster than expected and at a rate of change that is quite scary. If there was any good news today, it came at 9:55 with the University of Michigan's Consumer Confidence... Released On 9/14/2012 9:55:00 AM For Sep, 2012 Prior Consensus Consensus Range Actual Sentiment Index - Level 74.3  73.5  73.0  to 75.0  79.2  This is the largest upside surprise vs consensus this year, however, as usual the devil is in the details. The reason for the surge in Consumer Confidence is concentrated entirely in the expectations component which is up 8.3 points to 73.4. A separate reading on the 12-month outlook is also jumping, up 15 points to 88. These gains may reflect in part, based on strong gains among Democrats in the weekly Gallup index, a boost from the Democratic convention. Essentially consumers feel confident that inflationary pressures on prices will see moderation which clearly we are not seeing anywhere from corporate, manufacturing to CPI. As for opening indications, all of the major averages saw 3C confirmation on the open, GLD being the notable exception. More to come...