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Two Ways To Play: Don't Cry, CPI

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Strengthen your portfolio in good times and bad.

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Bloomberg reports the consumer price index increased in May more than economists had forecast.

The Labor Department said today that the consumer price index jumped 0.6%, the most since last November. Core prices, less food and energy, rose 0.2%, which was inline with expectations.

Separately, the Reuters/University of Michigan preliminary index of consumer sentiment dropped to 56.7 in June from 59.8 in May. It was the lowest reading since June of 1980. The report also showed the inflation rate that Americans expect over the coming five years remained at 3.4%, which was the highest level since 1995.

The numbers have many concerned about the direction of the economy. The report also showed consumer expectations for six months from now, fell to 49 in June, down 2.1 points from May's reading.

For more analysis, see Professor Kevin Depew's Five Things You Need To Know.

From the Bull Pen: With higher prices and a slowing in confidence and spending, those wishing to take a page from the 70's playbook see upside plays in gold. As frustrating as the yellow-metal has been to gold bulls, the GLD at its 200-DMA could be a decent risk-reward opportunity.

From the Bear Cave: The picture looks increasingly difficult for retailers. Downside opportunities could lie in companies like Tiffany & Co (TIF), no matter how pretty its jewelry looks.
No positions in stocks mentioned.

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