Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Les H who wrote (29555)	10/14/1999 8:53:00 AM
From: Les H	Respond to of 99985

US DATA PREVIEW: TOBACCO, ENERGY PRICES TO BOOST SEPT PPI By Marco Babic WASHINGTON (MktNews) - The combination of higher energy prices and a surge in tobacco prices stemming from litigation settlements is seen boosting producer prices in the U.S. during September, analysts said. The median forecast of a Market News International survey of 18 economists is for a 0.4% increase on the month within a range of up 0.3% to up 0.7%. The core rate is also seen rising 0.4% according to the median within a range of unchanged to up 0.8%. There is some risk of an even higher number as historically, PPI has been underestimated by 0.3 percent points in the past two Septembers, with the core showing underestimations in four of the past six years. Unlike the previous month where the core rate was tame at the expense of the overall number, this month the core rate will be higher in tandem with the overall number as tobacco prices are seen rising sharply on the 18 cent increase in tobacco prices which took hold at the beginning of September "If the Surgeon General's warnings were not enough to discourage smoking, perhaps another round of double-digit increases will do the trick," said Lehman Brothers economist Joe Abate. Given the 3.0% weight of tobacco in the overall PPI, "We suspect this latest hike will add between 0.3% and 0.4% to the aggregate index and slightly more to the core this month," Abate continued. But due to the "temporary nature of some of this month's distortions, we think the Fed will focus on the smoke-free core index. An increase of more than 0.2% in the 'smokeless' core PPI will probably raise alarm bells at the Fed, Abate continued. However, excluding the effect from higher tobacco prices, the underlying PPI trend continues to remain subdued. "Excluding the increase in tobacco prices, the PPI is estimated to have increased 0.3%, with core producer prices rising 0.1%," said Donaldson Lufkin & Jenrette economist Marilyn Schaja. Schaja's forecast is at the upper end of expectations, calling for a 0.7% gain in PPI and a 0.5% rise in the core. In other sectors, energy prices are seen higher as well and "the normal decline in gasoline prices as the driving season ends has not occurred this year because of the rapid decline in inventories of energy materials," Georgia State University Forecasting Center Director Donald Ratajczak said. Additionally, bad weather on the east coast during September "will be apparent in the fruit and vegetable prices," Ratajczak said. He added that with auto prices so aggressively discounted, "end of year deals appear to be price increases after seasonal adjustment."