The Spark

Here's how split the view is on rate hikes

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One day. Three data releases. Two polar opposite takeaways.

It's no wonder investors are frustrated.

Tuesday brought the release of April figures on housing, consumer prices and U.S. industrial production.

The production and inflation figures in particular have been hotly anticipated ahead of the Federal Reserve's June meeting on interest rates, and after Friday's better-than-expected April retail sales report.

The key question on all minds: is the U.S. economy picking up or running out of steam?

The answer: both, according to economists.

"The U.S. economy is rebounding nicely in the second quarter," wrote Harm Bandholz, chief U.S. economist at Italian bank UniCredit, to clients. "It began ... with a very strong retail sales report, and continued today with solid inflation numbers and a surge in industrial production."

While weather did boost utility output, Bandholz noted the key industrial gauge, manufacturing output, ticked higher by 0.3 percent on the month, and he was also cheered by the separate a 6.6 percent monthly jump in new home construction.

He added that "over the past few months, there has been a noticeable acceleration in the underlying inflation rate." Since December, the core consumer price index is up an annualized 2.547 percent, he said.

The latest round of data is "as good as it gets," said Bandholz, with financial markets having calmed down too. All told, he continues to expect "two or three rate hikes this year," at odds with markets which "have barely priced in a single hike for 2016."

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He is at odds with other economists on that, too.

Here is how Jason Schenker, president of Austin, Texas-based Prestige Economics, interpreted the same set of data releases Tuesday.

The consumer price report "takes some pressure" off the Fed to raise rates, because of low year-over-year readings, he said. Indeed, the core consumer price index slowed to a 2.1 percent gain in April over the same month last year, versus a 2.2 percent such reading earlier in the year.

As for new home construction. "Starts increased more and permits increased less than expected," he wrote to clients. The total activity level for both is still "consistent with historically recessionary levels of housing activity."

And as for industrial production. The aggregate level was down 1.1 percent from a year earlier, Schenker pointed out. Worse, it has been in negative territory for "eight consecutive months. This is recessionary data," he said.

"Since 1919," there have been just five months where that reading was negative and the U.S. was not in recession or recovering immediately after one, he added. Thus, "one of the oldest series of data available" indicates the "entire U.S. economy may be in recession. This ... further supports our expectations of no Fed tightening," said Schenker.

So there you have it.

Or as Charlie Munger said at Berkshire Hathaway's recent shareholder meeting, "Microeconomics is what we do, and macreconomics is what we put up with."