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New U.S. housing starts and permits soared in May off of record lows; and the producer price index (PPI) rose at a slower pace despite higher gasoline prices. What does it mean for the stock markets?
Art Cashin, director of floor operations at UBS, offered CNBC his insights.
The inflation numbers are "just about right," Cashin said. He counseled calm to the inflation-fearful.
"The creation of new money — or what the Fed is doing — isn't necessarily inflationary. If I flew over your house in Ben Bernanke's helicopter and dropped $1 trillion in new dollar bills, but you got nervous and put it all in your garage...that's not inflationary," he explained. "You need velocity of money" to create inflation.
But Cashin is not so optimistic on the housing situation.
"The market overreacted a little bit to housing starts. Starts can be weather-related, so I'd be a little wary" of seemingly good home builder news.
Second Opinion:
Despite Monday's stock moves, Cashin reiterated his certainty that the market is caught in a "stall formation" — using his pet term for an uphill trudge:
"I said this week was going to be a lulu. I think we started [the week] with a lulu beginning, and we're gonna continue that way."
He explained away the attention paid to yesterday's "almost non-existent volume":
It "came out of a 10-day trance. That's why people noticed it a good deal more."
He suggests that clues to upcoming stock moves may be found by watching the bond market. But Cashin still maintains that "some green shoots may be poison ivy."
For Cashin's takes on the Vix and the S&P 500's 200-day moving average, watch the full interview (above).
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CNBC's Companies in the News:
Morgan Stanley [MS
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Research in Motion [RIMM
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Nucor [NUE
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Steel Dynamics [STLD
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JPMorgan Chase [JPM
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Disclosures:
Disclosure information was not available for Cashin or his company.
Data is a real-time snapshot *Data is delayed at least 15 minutes