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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host -- Ignore unavailable to you. Want to Upgrade?

To: MrGreenJeans who wrote (10411)	10/18/2000 10:16:43 AM
From: Boca_PETE	Respond to of 42834

Thanks, GJ. Cubes have already bounced up above 77. Hopefully we get a retest later in the day ? P

To: MrGreenJeans who wrote (10411)	10/18/2000 5:16:32 PM
From: Wally Mastroly	Respond to of 42834

Beware creeping inflation.... dismal.com

To: MrGreenJeans who wrote (10411)	10/20/2000 10:25:10 AM
From: Wally Mastroly	Read Replies (1) \| Respond to of 42834

Mr GJ, I share the concerns of this excerpt (including inflation creep in the CORE). Any feeling on the subject? Excerpt: "...``The main driver is the basic tightness in the U.S. labor market. Layered on top of that is what I think will be some passthrough from higher energy prices into inflation expectations and wage demands,''..." - Friday October 20, 9:31 am Eastern Time Poll: Core Inflation Seen Creeping Up By Daniel Sternoff NEW YORK (Reuters) - A drop in sky-high oil costs next year will help cool headline U.S. consumer prices in 2001, but wage pressures from today's tight labor market will push up core inflation, economists forecast in a Reuters poll. On average, economists predicted in a quarterly poll that the Consumer Price Index (CPI) will rise at a 2.8 percent rate in 2001, down from a 3.4 percent annual rate expected for all of this year. But the closely-watched core CPI, which strips out volatile food and energy components, is seen on an upward march. It is forecast to edge up to 2.6 percent by the end of next year from 2.4 percent for 2000 and 1.9 percent reported last year. ``We are in a gradual uptrend on core inflation and I expect that to persist,'' said Josh Feinman, chief economist at Deutsche Asset Management. ``The main driver is the basic tightness in the U.S. labor market. Layered on top of that is what I think will be some passthrough from higher energy prices into inflation expectations and wage demands,'' he said. The quarterly survey of North American economists was conducted in the week ended Oct. 17, just before the release of the September CPI report, which showed a two-year climb in energy prices is already pressuring prices. Headline CPI in September rose 3.5 percent from a year ago while core prices were up 2.6 percent. OIL HAS FED ON ALERT Figures like these have put the U.S. central bank on alert. Federal Reserve Chairman Alan Greenspan said on Thursday that oil prices, which spiked to decade peaks last month, have so far had minimal impact on inflation expectations. But he cautioned that high energy costs still had ''potential implications for economic stability and monetary policy.'' Economists said a modest upward creep in core inflation should not ring alarm bells for the economy, and forecast that lower energy costs in the future should drag headline inflation lower. ``We maintain oil will not be able to maintain its footing above $30 a barrel in 2001,'' said John Ryding, senior economist at Bear Stearns & Co. Crude oil prices, currently around $33 a barrel, have held above $28 since August, but most analysts expect the spike to prove temporary. Economists also widely expect the economy will cool in 2001 under the cumulative weight of the Fed's rate hikes to a pace seen less likely to fuel inflation. The Fed raised interest rates six times from June 1999 through May 2000 in an effort to prevent a smoking pace of economic growth from stoking inflation, and has put financial markets on notice it still views inflation as the primary threat to the economy. JOB MARKET A THREAT With the unemployment rate now at 30-year lows beneath 4 percent, the jobs market will remain a source of potential wage inflation for some time to come, economists say. ``Even if the labor market were to start loosening up a bit, I think baked in the cake already is some likely further pressures showing through on the wage front,'' Feinman said. The service sector, which has a large labor component in its costs, is expected to be a particular problem. ``The situation is clearly a service price problem,'' said Steve Ricchiuto, chief U.S. economist at ABN Amro in New York. He noted that the overall CPI had accelerated by 0.7 percent through August 1999, of which 0.5 percent came from services outside of the energy sector. ``The majority share of the CPI is developments in service industries. That's a problem,'' Ricchiuto said. The poll surveyed 20 economists for headline CPI forecasts, with 14 providing responses for the core inflation rate. biz.yahoo.com