Advance inflation indicators have dropped off during
February, notwithstanding today's short squeeze on the
price of crude following reports of an aborted attack on
the Saudis' largest production facility. With crude
supplies on an upswing, pricing may ease further in the days
ahead. Crude producers and pit traders are doing their best
to try and kite the price, particularly Iran and the world's
newest tin horn dictator, Venezuela's Chavez.

The longer term advance inflation indicators remain in an
uptrend and this is a continued concern. I do not for one
minute buy into the differentiation between "headline"
inflation and the popular "core" rate. No one who shops
for all the goodies we need can help but notice that the
"core" rate is going up, too. But, you cannot ignore it
since the bond and currency traders are among the official
"core" rate "believers."