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Posts Tagged ‘producer price index’

Economic Update: Jobless Claims and Producer Prices

Posted by Larry Doyle on May 14th, 2009 10:42 AM |

Economic data released this morning included Initial Jobless Claims and Producer Price Index. Let’s dive right in!!

Initial Jobless Claims rose to 637k from last week’s reading of 601k, which was revised to 605k. The expectations for this week’s claims figure was 611k so the reading is disappointing as far as looking for stabilization within labor.

I am not surprised, though, for a few reasons:

1. we know there are going to be layoffs coming in the automotive industry. In fact, a large percentage of the increased unemployment filings came from states with heavy automotive exposure, especially Illinois.

2. as I reported in last Friday’s May Unemployment Report:

The fact that temporary government workers are factored into overall employment, in my opinion, is stretching the integrity of the report.

Thus, I am not surprised to see this week’s claims report higher than expected and I expect subsequent revisions to show higher claims as well.

In regard to the Producer Price Index, it was reported as an increase of .3% and without the volatile food and energy components as an increase of a mere .1%. No big deal, right? Well, it’s no big deal as long as you don’t eat. For those of us who actually look to consume food on a regular basis, this report is very troubling. Why?

Prices of food products rose 1.5%!! Including a rise of 43.7% for eggs, 5.2% for vegetables, 4.5% for beef, and 2.5% for pork.

Sense on Cents did receive very interesting color the other day about the state of produce in California. A reader shared:

The cost of food is on the rise faster than you can eat.
Now the feds have cut off water to the central valley and fields are not being farmed. I do not about you but ya might want to watch the price of a head of lettuce in NYC go through the roof.

Additionally, I was surprised to see a rise in prices for cars of .2% and light trucks of 1.1%. Despite the fact that car and truck sales are at depressed levels, the auto companies are in such desperate straits that they need to squeeze revenue wherever possible. That said, the asking prices of these vehicles may have risen, but who pays asking?

Please share insights on these fronts or any others from your local economies so we all can more effectively navigate the economic landscape!!

LD

St. Patrick Smiles on the Market!

Posted by Larry Doyle on March 17th, 2009 5:34 PM |

When trading bonds, I used a rule that Tuesday’s price action often reversed Monday’s. While that rule of trading was strictly a quirk based upon years of experience, I found it happen so regularly that I never discounted it. 

Supported by a surprisingly strong housing starts number (+22% to 583K) and a relatively mild increase in PPI (producer price index) of .1%, the market opened relatively flat today but firmed all day right into the close. The major stock market averages closed up 2.5%-4%!! (more…)

Stagflation…and More Market Moving News

Posted by Larry Doyle on February 27th, 2009 8:51 AM |

breaking-newsU.S. Economy Shrank 6.2% in Fourth Quarter, Most Since 1982  from initial report of -3.8%. Price   index in the GDP report revised up to .5% from initial   reporting of .1%

Both sides of this report, along with the recently reported higher than expected CPI (consumer price index) and PPI (producer price index) certainly seem to be pointing toward a greater likelihood of “stagflation. ” Our economy has not experienced that dreaded scenario since the early ’80s. 

Additionally, Citi Gets Third Rescue as U.S. Plans to Raise Stake IF privately held preferred shareholders do the same. What does this mean? Current common equity holders in Citi will be significantly diluted and the U.S. taxpayer is moving into a first loss position. Why is the government doing this? Very simply because Citi would otherwise likely lose counterparties willing to trade with it given the concerns of losses embedded in its holdings of toxic mortgage assets.

Market reaction? Stock index futures are pointing toward a 2% decline!

LD






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