First, CPI - its as expected....... 0.6 headline, ex food/energy 0.1. 2.8% annual run rate.

Housing starts.... not as expected. Rose 0.8% .vs. 7.6% in February.

Interesting.

Futures instantly responded with a gain, as expected.

Housing starts - you have to wonder - what are people doing in the homebuilding sector? We can't sell homes so we'll build more of them? Hmmmm....

The 10yr bond moved down instantly by about 4 basis points, now at 4.71%.

Of course traders will focus on the headline (ex-food/energy) - but let's look at what's moving it.

Drug prices down - why? WalMart's prescription program. That certainly helps.

This also puts the dollar in even more jeopardy, because it cuts the probability of a rate increase - and that will play poorly with the dollar index.

Housing starts are certainly surprising. Where is that coming from? Everyone's trying to cut down inventory - so was this nothing more than normalizing due to bad weather in the winter? Hard to tell. But it doesn't make a lot of sense, given the inventory, as a core change.

Drilling into the housing numbers, the increase was all in the Midwest. Everywhere else - it was down strongly.

And Industrial Cap down 0.2% - not good. Capacity utilization decreases = slow economy.

Oh, let's not forget oil - still over $64/bbl.

So this is what 'ya got - now its up to psychology, and that's a tough call for the morning and into the day. The headlines are what everyone will read, instead of drilling into it - as usual.

The real fun with earnings in the mortgage and bank sector starts this evening.