Suspension of Disbelief

While the hot inflation numbers this morning in the form of the Consumer Price Index report stole the headlines, it is also worth noting that retail sales unexpectedly dropped in January, the biggest setback in nearly a full year.

This type of data initially brings out the various calls for 1970s-style "stagflation," although back then we had various other factors like a wage-price spiral amid more powerful labor unions to spike inflation through the roof. It is worth noting that new Fed Chair Powell now seemingly has a bit of wiggle room to begin his tenure at the Fed talking a dovish game to try to squash the latest inflation fears. 

But until then, gold and her miners are finally catching a bid, despite a curious initial dump after the CPI report. As I write this, plenty of gold miners are higher on heavy buy volume, and gold itself is curling up on all timeframes. 

Returning to the retail angle, though, one would think the XRT sector ETF would be getting crushed this morning off those retail sales figures. However, XRT is green and recent outperforming issues like ANF W continue to shine, threatening fresh squeezes higher. 

Indeed, if some of the more heavily-shorted retail plays cannot go red after the CPI data plus the weak retail sales figures, we could be setting up for the perfect storm to squeeze the likes of Wayfair into the sky. The clock seems to be ticking on retail bears, as they are likely suspended in disbelief.