As the backdrop to the CPI number, both WalMart and Home Depot reported, and both were fairly disappointing, indicating what I've been harping on - a slowing consumer. Home Depot, with profit off almost 30%, is getting the woodshed treatment in the premarket, although it has rebounded some from its lows. WalMart is down slightly.

Asia was down big with Shanghi off 3.6% and all the other big bourses in Asia trading down 1% or so.

The premarket prior to the CPI number has been pretty quiet......my "nine panel", with the exception of Yahoo, shows no activity. Yet.

And then there is this ominous sign from Iran..... Centrifuges cranking up eh? Not good. This is a seriously bad thing, as eventually Israel is going to whack these plants if we don't do it first. Middle East turmoil is not a good thing in that it will, of course, spike oil precipitously.

And the CPI is...... up 0.4 headline, up 0.2 ex-food and energy. Empire manufacturing was 8.0, exactly as expected.

The futures came up post-announcement, from significantly down now pointing higher.

The unadjusted number was off for the most part due to a slackening of energy inflation; the rest was a matter of housing core prices not being up materially - and about 40% of the core is embedded housing components. Falling prices for clothing helped keep things in check - is this good news? Let's see..... we don't buy things and retailers cut prices. What's that word we use when GDP contracts? I think it starts with an "R"....

The bad embedded news is found in inflation-adjusted wages. Average weekly earnings for non-supervisory workers were actually down 0.5% in April on an inflation-adjusted basis. With the home equity ATM machine closed, this should - and did - translate straight into bad sales numbers at the retailers.

Now how's that? Simple - do you know anyone who doesn't need food or energy? Of course not. So this "cooked" CPI number may be good for the Fed, but the economy is not "The Fed" - it is the consumer, and when you look beyond the headlines, the consumer remains in trouble.

Looks like the Fed is "officially" on the sidelines; we now have a sub-1% growth rate in the first quarter, and inflation appears to be holding fairly stable - although above the Fed's target. No rate cut for the cheerleaders.

In a potentially ominous sign, however, bond traders are pushing up rates, selling treasuries..... the 10 year rate is now up to 4.69%, which is the top of its trading range.... if it pushes through 4.70%, breaking the recent trading range, the selling may accelerate, pushing real interest rates materially higher.

Gee, do you think the bond market has it figured out?

You have to wonder - will the equity market read beyond the headlines today, once they've had a while to think about it? And what of the housing data due out tomorrow?

April just came in with awful foreclosure data, up 62% year-over-year, and home prices and sales are posted down yet again. Down 6.6% for existing home sales, with prices down 1.8%. Gee, is it soup yet? Stabilization says the Realtors. Yeah, right - the foreclosure folks say "not a prayer; foreclosures usually go down in the spring, but not this time."

The homebuilder index comes out this afternoon. It will be interesting to see if they try to put lipstick on the pig.

Watch out for both thrown and falling pianos..... while most of the time you only have to look out for one, this time around it looks like the risks are roughly equal that you could get brained with either.