The U.S. dollar started out this morning on the defensive

Government released CPI numbers generated a sharp reversal across the board

Gold sold off, but closed slightly down against the dollar

April CPI up just .1% on the month; year over year prices dropped -.2%

Lowest CPI since October 2009

Core CPI (excludes food & energy) rose .3%

Biggest monthly jump since March 2006

News sent dollar up on anticipation that rate hike will be more likely

Inflation benchmark is just as real as the 6-1/2% unemployment goal

Traders still haven't figured out that if we ever approach the goal, it will be moved

Biggest factor within the .3% rise in the Core was +.7% in health care costs

Biggest increase since January 2007 - prior to Obamacare

Rising costs will slow consumer spending, weakening the economy and undermining employment

Yellen in a press conference today did not actually project a rate hike

It's all about extend and pretend; actually postponing the rate hike will buy the Fed some time before launching QE4

Increased inflation as the economy cools down means stagflation

The media is spinning increased inflation as good news

Bad economic news released yesterday:

Unemployment numbers came out higher

Fewer hires mean fewer fires

Chicago Fed National Activities Index came in at -.15

Three month moving average down to -.23

MAY PMI expected to rise to 54.6 unexpectedly declined to 53.8 - lowest lever in 16 months

Bloomberg Consumer Comfort Index continued to slide from 43.5 to 42.4

May Philadelphia Fed looked for a bounce back to 8; missed expectations with 6.7

Missed expectations 5 out of the last 6 months

Existing Home Sales expected improvement over March; dropped to 5.04 million

Kansas City Federal Reserve Manufacturing Index missed expectations at -13; dropping for 5 consecutive months

Economic data as bad as 2009 and inflation is getting worse

Janet Yellen acknowledged underlying issues with unemployment number, mentioned discouraged and part-time workers

Labor Force Participation Rate is not improving

Low-skilled jobs in jeopardy with minimum wage hikes

$15/hr fever will further hurts employment and erodes the tax base

Higher minimum wage will transform workforce because employers will hire better workers for the higher wages

Movement will substitute technology for labor costs

Minimum wage hikes will undermine the economic recovery that Janet Yellen pretends is existing

So she can continue to pretend that the Fed's monetary policy is working

And she can pretend that they can actually raise interest rates

In the unlikely event Yellen tests a rate hike, they will have to acknowledge that they were wrong

The Fed can always blame the data for deciding not to raise rates and therefore save face