Another volatile day in the stock market sees the major averages deep in the red

The Dow was down just over 1%; down 180 points, 17,529

The NASDAQ actually got walloped a little more; down just shy of 60 points, 1.25%

I think the catalyst for today's declines was a couple of Fed officials talking about how June is a live meeting - live from the perspective of, "We might raise interest rates"

I don't think it's live at all, I think it's dead, and if it were alive, the stock market decline would kill it

If Wall Street actually believes that the Fed is serious about raising rates in June, the market would be tanking

In fact, if more people believed it, the market would be down more than 180 points today

As we got closer and closer to the date that the Fed was theoretically going to raise rates, the market would be so low, that any talk of a rate hike would be dead, because the Fed would be dealing with tighter financial conditions

The Fed doesn't want to tighten monetary policy with financial conditions are tightening on their own

It's interesting, too, that you hear people asking, "Why does the Fed have a June rate hike on the table"? I keep hearing about the economy strengthening

The economy is not strengthening! That's just the point, the economy is weakening

Yes we did get a little data in the last few days that was better than expected, buy we also got data that was worse than expected

Most of the financial data that has come out since the last time the Fed hiked rates has been bad

If the Fed is talking about raising rates, it's not because the economy is getting stronger, it is despite the fact that the economy is getting weaker

What is getting stronger is inflation

The problem is, even though inflation is above the Fed's so-called 2% target, I don't think this raises the probability of a rate hike

If anything, the increase in prices will slow down the economy even more

We actually got some official inflation data today, we got the April CPI

The consensus was for a move +.3, following the prior month's +.1

We got a bigger jump than was expected - we got +.4

The year-over-year headline number - not the core number - is now 1.1

So the year-over-year is below 2% but if you annualize that .4 for the next 11 months that would be a 6% annualized rate of CPI-based inflation

I read articles about the jump in the CPI and the jist was that this is good news, because the Fed is making progress on its policy goal of price stability -

If you think about how ridiculous that comment is:

We had a big spike in consumer prices, which if you annualize the rate of increase that's 6% increase in prices and that's progress on price stability?

If anything, the Fed is moving away from price stability

 If you're going for price stability, the less prices go up the more stable it is

I don't know how much more "stability" people can stand -

If prices get any more "stable" than this, we're going to have runaway inflation

This is not about price stability - this is about generating inflation on purpose because there is no alternative for the Fed

In recent times, a hotter than expected inflation number, causes the currency goes up

And when inflation is lower than expected, the currency goes down

Now, you might think that's counter-intuitive, and actually it is

Why would higher inflation be good for a currency?  After all, inflation measures how quickly a currency loses purchasing power

So why would a currency that is losing purchasing power more quickly be more valuable?

In today's world, low inflation is bad for your currency and high inflation is good for your currency

The reason for that is that everybody is fixated on central bankers

The idea is that if inflation is high, that means the central bank of that country will not cut rates

So it's the tighter monetary policy which is a consequence of higher inflation, that is good for the currency