D’oh! Inflation!

Given the bond market’s shocked—shocked!—reaction to yesterday’s “core” inflation news, you’d think nobody on Wall Street does any of the following:

1. Buys gasoline, food or clothing. 2. Rents cars. 3. Buys airline tickets. 4. Stays in hotels. 5. Eats out. 6. Eats in. 7. Pays college tuition. 8. Goes to a doctor, a dentist, or a lawyer. 9. Has life insurance, health insurance, or property and casualty insurance. 10. Pays property taxes. 11. Goes to a psychiatrist.

There are more examples of the bond market participants’ apparent lack of participation in the real world than I can fit here, and this is especially true in the so-called “services” sector of the economy—which, according to the papers, is what particularly freaked-out the bond market’s former vigilantes.

Item Number 11, for example, is just one of those services where the cost is now taking off after years of flat-lining—at least according to a psychiatrist-friend who tells me she has raised her standard hourly fee from $200 to $250, without a problem. (You can do the math on that percentage increase. Hint: it’s more than the thirty-year bond yield.)

Indeed, she may have some new customers soon—if the bond market’s Homer Simpson-esque reaction to what had been visible to anybody with eyes is any indication.

Jeff Matthews I Am Not Making This Up

© 2006 Jeff Matthews

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations.