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Strategies & Market Trends : Galapagos Islands -- Ignore unavailable to you. Want to Upgrade?

To: Oral Roberts who wrote (52194)	5/20/2004 4:26:11 PM
From: Ish	Respond to of 57110

<<On the lack of inflation front the mills have informed us of another 5% increase for all June orders. >> Better than the gas increase. BTW two weeks ago gas was $1.64 and diesel was $1.79. Now gas is $2.05 and diesel is still $1.79.

To: Oral Roberts who wrote (52194)	5/24/2004 10:56:36 AM
From: zonder	Respond to of 57110

chron.com ... a new research report from three economists at the Federal Reserve Bank of Atlanta. Innocently titled Examining Contributions to Core Consumer Inflation Measures, the 52-page paper tells us that most of the ominous decline in the core inflation rate that occurred between the 9/11 attacks and the end of 2003 can be traced to two factors: declining apartment rents and sagging used car prices. Those, in turn, were caused by the very low interest rates created by the Federal Reserve in its attempt to avoid a collapse and to stimulate the economy. In other words, the low interest rates that were supposed to cure a sagging economy also put in motion forces that were measured as the deflation everyone feared. The study found that most of the decline in core-services inflation, a category that includes shelter, could be traced to declining apartment rents. This is no minor matter because "rent" and "owner's equivalent rent" account for 29.6 percent of the consumer price index. A decline in apartment rents works itself into the computation of "owner's equivalent rent," which is the measure the Bureau of Labor Statistics uses instead of housing prices. Putting the two factors together, the Atlanta study concluded that two-thirds of the sharp decline in core inflation from late 2001 through 2003 could be traced directly to rents and used cars. And both were the direct result of low interest rates. ... What does that mean? First, we aren't crazy. The millions who were skeptical about the reported 1.1 percent rate of core inflation (consumer prices, excluding food and energy) for 2003 had good reason to be skeptical. The price index was wacko. The inflation we experienced in our wallets was real. Second, disinflation (the decline of the rate of inflation) may have been a concern, but actual deflation wasn't — and isn't — in the cards.