The question no one wants to ask: What about inflation?

Lost amid all this credit market anxiety -- and the debate about how much the Fed should cut rates -- is the question of inflation. We keep hearing that it's dead and buried, and that it doesn't matter. But did anyone else happen to see the import price report for November -- the one that showed prices jumped 2.7% between October and November (vs. expectations for a 2% gain) and 11.4% year-over-year? That's the biggest YOY gain in any month on record (the data series goes back to 1982).

Surely "core" prices were tame right? Well, no actually. Ex-petroleum prices were up 0.7% on the month, or 3% YOY. If you exclude all fuels, you still get a 0.5% rise (3% YOY). Moreover, prices of Chinese goods are now rising consistently. They had been falling until several months ago, and the loss of cheap Chinese imports could help pressure overall prices higher.

Meanwhile, in the commodities markets, crude oil is soaring (up more than $4 a barrel as I write). Soybeans were recently trading up to a fresh 34-year high. Wheat was recently trading limit up (meaning it rose the most permitted by the Chicago Board of Trade). Corn is closing in on its old high of $4.37 a bushel. And so on and so forth (though admittedly, the metals market is more mixed. Some metals, like gold, are up substantially while others, like copper, are down.)