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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: KM who wrote (25510)	9/10/1999 6:45:00 PM
From: pater tenebrarum	Respond to of 99985

Truff, obviously the trader in question didn't take a really close look at the numbers...they were indeed huge. and they are yet another reason for the Fed to act promptly. the core rate was mainly saved by a continued decline in PC prices(nothing new here) and a rather miraculous decline in car prices, in spite of auto manufacturers reporting big increases and improving bottom lines at dealers. the supposed 5,3% plunge in vegetable prices(!) was a big contributor too...<g>. now let's look at the important stuff, proof that cost push inflation is actually running rampant already, no matter how WS wants to spin it: intermediate goods prices rose 0,8% - that's a cool 10% annualized. crude goods soared 4,6% (55%annualized)...not including energy, they rose still a whopping 1,8% - that's an annualized inflation rate of 20%. oh yes, that's HUGE. and it also happens to be what the Fed will be looking at - an enormous build-up of inflation in the pipeline. the monthly rise in energy costs of 3,7% that the bond market has laughed off today is also worrying imo, even though WS likes to make as if energy costs don't count...btw, the oil price rise is continually declared unsustainable by the bulls, ever since it started. now the new-found fervor for energy stocks on WS may be a sign that indeed some sort of correction is looming, at least in the energy stocks, if not necessarily in the price of crude. but to ignore the sharpest rise in oil prices of recent memory is a folly. i have repeatedly argued on this thread that we will see much higher oil prices, not only based on technicals, but simply because the fundamental case is overwhelming. it is not just the supply side of the equation that has changed dramatically due to OPEC's new-found discipline, it is a revival in demand that's driving this thing as well. what's more, in the long term, say two - five years out, i expect MUCH higher prices, due to the fact that the big fields in the western world are depleting fast. OPEC will regain the control over oil that seemed lost for a while. the implications of this are, well, HUGE. anyway, when AG sees the crude and intermediate goods price rises he's at best going to ask himself if he should push for a half point next time or 5/8....(just kidding, 1/4 as usual most likely). add to this disastrous PPI report that productivity growth has tumbled sharply while unit labor costs have been accelerating at an extremely fast pace lately and the unions are starting to flex their muscle successfully in one industry after another, and only the most naive people can actually continue to conclude that we're still in no-inflation-and-no-more-rate-hikes nirvana. regards, hb