Wall Street Greek: Premarket: Important Inflation Gauge on Tap

(This report is updated all morning long as data becomes available.)

(Stocks in this article: NYSE: AIG, Nasdaq: DELL, NYSE: CDE, NYSE: SUG, Paris: VIV.PA, AMEX: SPY, AMEX: DIA, Nasdaq: QQQQ, AMEX: SDS, AMEX: DOG, AMEX: QLD)

While you slept... Asian shares sank further, WTI crude surpassed $103 and gold shot past $976. However, since the wee hours, crude and gold have backtracked. Unfortunately, stocks do not look to be benefiting, as real consumer outlays registered unchanged (+0.4% before adjusting for inflation). The PCE Deflator progressed 2.2% in January, year-over-year, above that important (but not really) Fed preferred range.

The dollar continues to sink, and Ben Bernanke offered up some new concerns Thursday afternoon when he said a few American banks could fail. "Thanks Benjamin," the masses uttered in chorus as they rushed to their local branch to save their own Benjamins. By the way Ben, nobody believes you when you quote Bush, almost simultaneously in fact, in saying the economy should continue to grow. I hate yes-men!

Friday's Playbook:

January Personal Income and Outlays were reported this morning at 8:30 EST. Bloomberg's consensus of economists had forecast both data points would show 0.2% growth. The market was apprehensive of both figures, and rightly so. Personal income came in +0.3%, and we found ourselves in disagreement with Rick Santelli, who saw the growth inspiring. We prefer to see moderate income growth, offering a non-threatening wage inflation scenario.

Personal consumption of course helps investors gauge how well the consumer is holding up. In January, weekly same-store sales data recorded by the International Council of Shopping Centers was relatively weak, so the same information should have been expected from personal outlays. On the surface of this morning's report, outlays looked good, plus 0.4%, but as CNBC's Leisman pointed out, adjusted for inflation spending was unchanged.

Inflation Gauge

Perhaps the most important data from the report arrived in the PCE Deflator, the pricing gauge viewed most important by the Federal Reserve. The Fed targets a growth rate between 1.5-2%, but would likely tolerate a higher rate if necessary in times of economic strife, according to a Bernanke authored white paper. The market probably doesn't remember that fact though, so watch out because today's gauge showed core prices rose 2.2% year-over-year. "That's hot," quoting Paris Hilton.

NAPM - Chicago

After sad news from both Philly and New York area manufacturing, the National Association of Purchasing Managers - Chicago, was expected to show the Midwest teetering on the fence that divides contraction and expansion. Bloomberg's consensus projected a measure of 50.0 for February. The Midwest has held up relatively well to this point, excluding Detroit, but we correctly suspected (earlier this morning) the region would start to chime in with depressing news soon enough. NAPM - Chicago followed through on our expectations, posting a reading of 44.5, which indicates the region is sinking quickly into economic contraction.

Michigan Consumer Sentiment

The University of Michigan's Consumer February Sentiment Index was anticipated to reach only 70.0 in its final measure for the month. Earlier this week, the Conference Board's reading of consumer attitudes missed the mark by far, so the Michigan figure was looking hopeless as well. The market has bounced from its January lows, so there was some possibility of sentiment stability, but we were not advising bets on it before the report. It seems sentiment was impacted by recent bond insurer concerns more than it benefited from stock market bounce. In fact, the Michigan figure amounted to 70.8, marking a 16-year low.

With commodity prices crazy volatile lately, the Farm Prices Report at 3:00 p.m. Friday should not be overlooked either.

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