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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Street Hawk who wrote (1918)	2/16/2001 11:06:41 AM
From: jim black	Read Replies (1) \| Respond to of 74559

"Economists weren't sure how to take the report" They can't pronounce "inflation" and "mess brought on by the highly vaunted AG" Idiots! Sorry for the rant. Jim Black

To: Street Hawk who wrote (1918)	2/16/2001 2:42:31 PM
From: Mark Adams	Respond to of 74559

09:22 PM ECONOMY TALK: The PPI is a shock containing fluky elements but there nonetheless mild reasons to be concerned about the long-term inflation prognosis. The 1.1% overall gain was the most since September 1990 and far exceeded the consensus estimate for a gain of 0.5%. The large 0.7% gain (consensus +0.2%) in the core rate is clear evidence that the gain was not limited to energy costs. Indeed, there were increases in a broad array of goods. But the core increase was impacted by outsized gains in tobacco and car prices, which added four tenths of a percent to the increase in the core rate. This is not to say that the increase was entirely a fluke--it wasn't. There were increases in the prices of several categories that clearly suggest that the secondary effects of higher energy costs are filtering through to goods prices. For example, the plastic resins materials index within the PPI rose 2.3%. Plastics, of course, use petroleum products as an input in the manufacturing process and therefore likely figured prominently in that increase. Another example of how the secondary effects of rising energy costs are impacting inflation can be seen in the 1.1% increases in the prices of non-durable manufacturing goods. These goods are being impacted by high energy prices through their effect on transportation costs. For example, nearly 80% of all U.S. goods are transported by truck and trucking fees have increased as a result of high energy costs. Moreover, air cargo and rail freight fees have also increased as a result of high energy costs. This means that a wide variety of goods can be impacted high energy costs, from pet foods, to cosmetics, and to a wide variety of consumer products. But the sharp gain in the PPI is at odds with other indications on inflation suggesting that producer costs are falling. For example, the Journal of Commerce’s industrial materials price gauge has fallen sharply over the past few weeks (after the survey period for the January PPI, by the way) to an 18-month low. In addition, the Bridge-CRB index has slipped below its 200-day moving average, indicating a downward trend is, now in place. bondtalk.com