Justa, Media keeps looking for another rate cut from Sir Alan-of-Greenspan (below-for instance)/ edit - bottom link:
Any thoughts on pros/cons of such a move?
My gut says that it might do more harm than good (may imply economy headed for the old double-dip recession)
Looks like the 'small IMF loan' of 30 billion (with-a-B) to Brazil has got some of the bank stocks a poppin'.
Perhaps trying to hold of a possible South American-contagion?
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U.S. Economy: Producer Prices Fall, Giving Fed Leeway to cut
By Carlos Torres and Evan Hessel - 08/08 11:25
Washington, Aug. 8 (Bloomberg) -- Wholesale prices of food, cars and computers unexpectedly fell
in July, giving the Federal Reserve room to cut interest rates to bolster the faltering U.S. economic
recovery.
The 0.2 percent drop in the Labor Department's index of what factories, farms and other producers
receive for their goods followed a 0.1 percent increase in June. The number of U.S. workers filing
new claims for state jobless benefits was down more than expected last week, the Labor Department
also said.
``There is even less inflation than we thought,'' said David Wyss, chief economist at Standard &
Poor's in New York.
Fed policy makers meet next week, and economists say they are likely to declare that slowing growth
poses a greater risk than inflation to the fledgling recovery. Adding to evidence the economy is
flagging, Wal-Mart Stores Inc., Target Corp. and other retailers today reported that sales at stores
open at least a year rose less than expected.
Investors expect the Fed's Open Market Committee to cut the benchmark overnight bank lending
rate a quarter point by yearend, based on trading in futures contracts tied to the rate. A Fed
statement stressing weakness would be a step in that direction. The rate already is at a 41-year low
of 1.75 percent.
Stocks were mixed and U.S. Treasury securities fell. The Dow Jones Industrial Average gained 4
points, or 0.1 percent, as of 11 a.m. New York time. The Nasdaq Composite Index lost 12 points, or
1 percent. The yield on the Treasury's benchmark 10-year note rose 6 basis points to 4.37 percent. A
basis point is 0.01 percentage point.
Continuing Jobless Claims Rise
Last week states received 376,000 initial applications for unemployment benefits, a decrease of
15,000. Analysts had expected claims to fall to 385,000 from a previously reported 387,000, based
on the median of 30 forecasts in a Bloomberg News survey. The four-week moving average of
claims dropped to 379,000, the lowest since March 2001, when U.S. employment peaked and the
recession was starting.
While new applications fell, the number of people continuing to collect benefits rose by 51,000 to
3.532 million in the week that ended July 27. The insured unemployment rate rose to 2.8 percent.
That measure of the number of people receiving benefits as a share of those employed tends to
move with the overall jobless rate.
The numbers indicate ``sluggish growth in payrolls and a relatively steady or slightly higher
unemployment rate,'' said Stephen Stanley, an economist at Greenwich Capital Markets Inc. in
Greenwich, Connecticut.
Economists had expected a 0.1 percent rise in the producer price index, according to the median
estimate of 61 forecasts in a Bloomberg News survey. The producer price index has fallen 1.1
percent for the 12 months that ended in July, today's report showed.
Unused Capacity
The so-called core index, which excludes food and energy, fell 0.3 percent, the biggest decline
since October. Economists had expected a 0.1 percent increase.
``This tells you there is still far too much spare capacity out there in the economy,'' said Josh
Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc., a New York-based forecasting firm. ``An
economy that is just poking ahead is not making any dent in that unused capacity.''
Manufacturing and services stalled in July; unemployment stayed near an eight-year high; and from
April through June the economy grew one-fifth as much as in the first three months of the year.
Today's report showed energy prices rose 0.1 percent last month after being unchanged in June.
Gasoline prices rose 2.2 percent in July after rising 1 percent in June. Natural gas prices fell.
Food, Passenger Cars
Food prices fell 0.1 percent after rising 0.1 percent. Last month's drop reflected lower costs for fresh
fruits, dairy products, beef and poultry.
Passenger car prices fell 1.5 percent after rising 0.4 percent. The decrease was the biggest since
October, when automakers used zero interest financing to boost sales after the terrorist attacks in
September. Light truck prices fell 1.6 percent last month after rising 0.5 percent.
Sales of cars and light trucks reached 18.1 million units at an annual pace in July, the highest since
October, after General Motors Corp. and other carmakers revived no-interest financing to help clear
out 2002 models. General Motors' sales surged 24 percent from a year earlier. Sales dropped 12
percent in May when the company tried to stop offering the no-interest loans.
Prices for capital equipment, such as machinery, tools and computers, fell 0.4 percent last month.
Computer prices fell 3.8 percent after falling 1.6 percent. Telecommunications equipment prices
fell 1 percent, the biggest drop since March 1988.
Intermediate Goods, Steel
Intermediate goods prices, such products as flour, yarn, lumber and steel, rose 0.2 percent in July,
the same as in June. Excluding food and energy, intermediate prices rose 0.2 percent, also the
same as the previous month.
Prices for crude goods, such raw materials as coal, raw cotton, oil and scrap metal, rose 0.6 percent
after falling 3.6 percent. Core crude goods prices, which exclude food and energy, rose 1.7 percent
after rising 1.6 percent the previous month.
Steel prices rose 0.9 percent. The U.S. government imposed tariffs as high as 30 percent on some
steel imports in March.
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