UMichigan Misses, 5 Year Inflation Expectations Rise To Second Highest In 2011

Bizarro time is here, now that we have another market surge based on another economic indicator miss, in this case the uber-irrelevant UMichigan confidence, which came at 71.8 on expectations of 74, and a drop from May's 74.3. Granted the only reason stocks are rising is not on any fundamentals, but purely due to the clobbering the USD just took, which sent the EUR surging, and pushed the Dow into triple digit territory. To whoever continues to trade this centrally planned farce, our condolences. The only relevant data in the index was that the 5 year inflation expectations jumped from 2.9% to 3.0%, the second highest in 2011, and only below March's 3.2%. Time for the Fed to panic once again, now that Operation Twist 2 is just matter of months if not weeks.

UMichigan:

5 Year Inflation Expectations:

Elsewhere, the Leading Economic Indicators number came at some value, but since this metric is even more irrelevant than Michigan's rolodex of 10 Wall Street CEOs, we refuse to even mention it.

Here is Goldman's take on the surging LEI. No seriously, read the explanation.

MAIN POINTS:

1. The index of consumer sentiment fell by 2.5 points in the June preliminary report to 71.8. A decline in the index of consumer expectations subtracted 1.6 points, and a deterioration in households' assessments of current activity subtracted the remaining 0.9 points. The decline in both series was relatively moderate, but given that the level of the confidence indexes is already low, it was a discouraging report overall. The survey's measure of 5-10 year inflation expectations was 3.0%, close to its average over the last ten years.

2. The index of leading economic indicators increased by 0.8% in May, more than expected (Consensus: 0.3%). The surprise reflects better building permits reported yesterday-which are usually not incorporated into consensus forecasts-and forecasted increases for the three missing components (durable goods orders for capital equipment and consumer durables, and the real money stock).