Consumer prices rose 4.1 % in 2007 compared to 2.6% for 2006.  The substantial rise was due to much higher energy and food prices.  Many news sources remove the energy and food prices from the numbers and show that consumer prices went down.  This is unrealistic because food and energy are in the top 5 human needs.  Ridiculous.  I do not think the fed will ignore these numbers, but they are in a catch-22.  Don't lower rates and they risk further detioration of the economy, but potentially keep inflation in check.  Lower rates, and help out the markets, but potentially ignite inflation.  Given that oil prices have been plummeting over the past couple of weeks it may give the Fed just enough short term cover for a 50 basis point cut, although I do not expect inflation to be absent from their verbiage.

Intel news was set to super-tank the markets, but JPM news led to a slightly higher post-open.  However, as the early markets settled in, the continued downward trend returned to the Dow.  Markets are confused and all stocks are looking for their bottoms, our stock picks are trending with the markets, although we are currently recommending 65% cash in our model portfolio.  When we see a bottom, we will be releasing stock picks quickly.

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