Last Week in Review: How do you sort out seemingly contradictory data and the impact on the market? Read below to find out.

Forecast for the Week: How is the housing industry holding up? And what does the labor market look like? We’ll see this week.

View: Monday, April 18 is tax day! Did you know you can get freebies and other specials on tax day? Find out where below.

"YOU’RE HOT THEN YOU’RE COLD..." Katy Perry’s hit song "Hot N Cold" is all about contradictions. And each week the markets receive their share of news that seems contradictory... but may not be. The inflation reports from last week provide an excellent example - so let’s see what they really said and why it matters!

Last week, two inflation reports came in. The Core Producer Price Index (PPI) reported that inflation was slightly hotter than the expected. However, the Core Consumer Price Index (CPI), which measures inflation at the consumer level, came in slightly cooler than expected.

So why the contradiction between the two indices? What does this mean?

Although the reports seem contradictory, they’re not really. They actually focus on different aspects of inflation. The PPI shows us what’s going on at the wholesale or production level, while the CPI focuses on what’s happening with people like you and me who consume products.

So, looking back at the reports, we see that the PPI indicates inflation is on the rise at the wholesale level. But the CPI report indicates that the inflation isn’t being passed on to consumers - like you and me - at least not yet. The bottom line is that inflation is most certainly on the rise, but it remains somewhat tame for the moment in terms of what consumers are experiencing.

Speaking of production, last week we saw that manufacturing in the New York State region rose for the fifth consecutive time and came in at the best level in a year. Similarly, Industrial Production came in better than expected. Higher productivity keeps operating costs lower, lessens the need for hiring, and helps keep prices down. Also last week, Capacity Utilization - which simply means how much of a factory’s production capacity is being used - was reported at the highest reading since mid-2008, which means it is on the rise. However, until this reading climbs a little higher, the available slack within the production cycle will inhibit some hiring and also inflation growth.

Overall, the reports indicated that business conditions and production continue to improve. However, we’re not quite where we want to be, and more growth is needed to really help boost the labor market.

In terms of how the news impacted Bonds and home loan rates, last week’s reports were friendly to Bonds and home loan rates in a couple of ways. First, they promoted low inflation for the time being - and inflation is the archenemy of Bonds and home loan rates. Second, the slack in production and slowed pace of hiring is Bond friendly. Remember, Bonds actually like negative economic news because it normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve.

All of this means that home loan rates are still very attractive. If you have been thinking about purchasing or refinancing a home, call or email me to learn more about how you can benefit from the current situation. Or forward this newsletter on to someone you know who may benefit.

In the early days of this week, the news will shift to the health of the housing industry, and then end with more labor and manufacturing news. Here are some of the reports to watch:

• We’ll start out Tuesday morning with new reports on Housing Starts and Building Permits in March.
• Those reports will be followed on Wednesday by a report on Existing Home Sales in March. So by mid-week, we’ll have a good look at the health of the housing industry. Feel free to call or email me to discuss how these reports came in and what impact they may have.
• Thursday we’ll see the weekly Initial Jobless Claims Report. In the report released last week, Initial Jobless Claims climbed higher to 412,000, and above the psychologically significant 400,000 mark for the first time since March 5th. Funny how those round numbers work with our brains - it's the same logic as why something at the store costs $7.99, instead of $8.00. Overall, the report indicated that employment growth continues to muddle along.
• Also on Thursday, we’ll see more manufacturing news - this time in the form of the Philadelphia Fed Index, which is considered an important indicator of the manufacturing industry and, therefore, has the potential to move the markets depending on how it comes in.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.

As you can see in the chart below, Bonds climbed at the end of last week, due in large part to the report that inflation remained contained for now.

Remember, inflation is the archenemy of Bonds and home loan rates. So the news of contained inflation was good for Bonds and home loan rates - making this a good time to purchase or refinance a home. Call today to get started.

Tax Day 2011 Freebies

Several companies are offering relief to taxpayers by giving away goodies or offering special deals.

By Cameron Huddleston, Kiplinger.com

Tax day probably isn't on the top of anyone's list of favorite days. But here's a reason you can actually look forward to April 18 (the deadline for filing your tax return this year): FREEBIES.

Several companies will be offering relief to taxpayers in the form of free treats, food, workouts and massages, and drink and dining specials. Here's a rundown of who is offering what:

Bally Total Fitness is letting anyone work out for free April 18. Members can sign up from April 15 through April 21 for a free 30-minute personal training session. And during that same period, non-members can take advantage of a tax day membership special with a two-year Premier National Access membership for $418, a savings of $61 from the standard price.

California Tortilla is giving customers free chips and cheese (queso) with a purchase on April 18 because "you have to pay the big cheese."

Cinnabon will offer two free Classic Cinnabon Bites on April 18 from 6 p.m. to 8 p.m. as part of its Tax Day Bites promotion.

HydroMassage locations nationwide will provide free massages between April 14 and April 18 to help eliminate the stress of tax filing. Get a coupon for a free message at www.hydromassage.com/taxday.htm and call ahead to schedule a session.

IHOP has a kids-eat-free promo the entire month of April. From 4 p.m. to 10 p.m., children 12 and younger get one free meal with each paying adult.

MaggieMoo's Ice Cream and Treatery will offer a free mini ice cream sundae from 3 p.m. to 6 p.m. April 18. The "Sundae Stimulus" will feature the new Crumb Cake Fundae, which includes cinnamon Hostess� Streusel Cake, cinnamon "Cinamoo" ice cream, caramel sauce, mixed nuts and whipped cream.

McCormick & Schmick's will host an all-day Tax Relief Procrastinators Celebration on Monday April 18, featuring a variety of $10.40 entr�e specials (available in the bar only) and tax relief drink specials. For extra tax relief, all guests who make a purchase in the bar all day on April 18 will receive a $10.40 dining certificate (while they last) to use the next time they visit the restaurant.

P.F. Chang's is offering a 15% discount on dine-in and carry-out orders April 18 (alcohol and happy hour items excluded).

Unfortunately, several companies that offered tax-day freebies in the past won't be doing so this year. For example, you won't get a free cup of coffee at Starbucks this year. Subway, Jamba Juice, Dunkin' Donuts, Kimpton Hotels and T.G.I. Friday's won't offer any special deals on tax day, either.

Reprinted with permission. All Contents �2011 The Kiplinger Washington Editors. www.kiplinger.com.

Economic Calendar for the Week of April 18-22, 2011

Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.

Economic Calendar for the Week of April 18 - April 22