Twisted Thinking: Some Hail Consumer Inflation

Crude oil is lower, and the dollar is up.

Consumer inflation is a tad hotter than expected. To show you how twisted things have become, some greeted this as positive news, since it supports their hope that the Fed will raise this year, which will help move the dollar up more. Under this thesis, dollar strength will put pressure on commodities.

Problem is, this theory was wrong yesterday. Stocks traders were bitterly disappointed yesterday, as a dollar rally failed to prevent oil from moving up.

The reason the dollar is rallying again as Irish voters rejected the European Union's Lisbon treaty, which may doom the EUs reform plan. The plan replaces a EU constitution that was already rejected by Dutch and French votes.

KeyCorp successfully raised $1.65 b in offerings of common and preferred stock (10 percent more than planned).

The $1 billion of common stock, consisting of 85.1 million shares, was priced at $11.75 each. Stock closed yesterday at $11,98, down 23.8 percent, down another 3 percent in pre-open trading.

US Air is jumping on the "business transformation" bandwagon, which is a fancy way of saying you're going to be charged for peanuts and don't check in any bags. There's going to be fewer flights, fewer employees. The cost of fuel is up 90 percent in 12 months. What does that mean? They estimate they will spend an average of $299 per passenger for a roundtrip, it was $151 in 2007, $70 in 2000.

The NYSE has finally made some long-awaited changes in its rules regarding specialist trading. Specialists are giving up something that was formerly very valuable. They will no longer get an advance look at incoming orders, but this had no value because they were getting very little orderflow. This allows them to trade on parity with incoming orders, whereas before they were not allowed to do that: they had to step to the back of the line. They also couldn't call a trading desk and were very limited in. The hope is that this will get them to be more involved in trading. The changes will take place in the next few months.

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