The CPI numbers released this morning seemed to be exactly what Wall Street was seeking. Although the actual CPI number was up 0.7%, the largest increase since Hurricane Katrina, the core number, which excludes food and energy, came in at 0.1%, less than the forecasted 0.2%. Combined with the recent unemployment numbers which were better than expected, and increasing economic strength shown by the Fed Beige Book yesterday, this is about as good as it gets as this morning's surge in the equity markets demonstrates!

It indicates that the economy is still strong with slow growth despite the housing slowdown and higher gas prices. It also shows that inflation is contained primarily with rising gas prices and is not spreading to other parts of the economy.

This is the scenario that Fed Chairman Ben Bernanke described when the Fed stopped raising interest rates several months ago and gives him all the ammunition he needs to continue on his current path, which is to do "nothing" for the foreseeable future. The Chairman appears to be one smooth operator, more so than the forecasters on Wall Street.

Wall Street seems to have a split personality disorder. One personality says that the housing crisis and higher gas prices will eventually put the U.S. economy into a recession, thus forcing the Fed to lower interest rates. The other personality says that inflation is just beginning to awaken, and the Fed will eventually have to raise rates.

The CPI and the recent economic reports seem to be put low odds of either scenario occurring. Both scenarios are possible but not probable at this time. The real question is whether this will cure Wall Street's Split Personality Disorder? Only time will tell.

However, as Chairman Bernanke has repeatedly said, the economic data will dictate Fed actions. Remember to Follow the Fed. It is much easier and more profitable.

Doug Roberts is the Founder and Chief Investment Strategist for FollowtheFed.com, an independent research firm focusing on investment strategies using the Federal Reserve's impact on the stock prices. He previously held executive positions at Morgan Stanley Group and Sanford C. Bernstein & Co.