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

To: Kirk © who wrote (8819)	12/11/1998 10:04:00 AM
From: Jeffrey D	Respond to of 42834

Still no signs of inflation. I believe signs of inflation would be one of Bob's indicators for a potential Bear market. Jeff << Inflation Kept at Bay by Price Drop -------------------------------------------------------------------------------- WASHINGTON (AP) -- A big drop in energy prices and the biggest decline in food costs in 17 months made inflation a no-show once again at the wholesale level last month. The Labor Department said today that its Producer Price Index, which measures inflationary pressures before they reach consumers, dipped 0.2 percent in November as the price of gasoline, vegetables and fruit all took a nose dive. Through the first 11 months of this year, prices at the wholesale level have been falling at an annual rate of 0.7 percent as global economic turmoil has depressed demand for oil and other commodities. Inflation has been almost as well-behaved at the consumer level. So far this year, the Consumer Price Index is rising at an annual rate of just 1.6 percent, even better than last year's ll-year low of 1.7 percent. The November CPI will be reported next Tuesday and the expectations are for it to show a modest 0.2 percent increase. The absence of inflationary pressures has given the Federal Reserve the leeway to cut interest rates three times this fall in an effort to ensure that a big rise in America's trade deficit, which has battered manufacturers and farmers, does not push the country into a recession. The Fed meets again on Dec. 22 amid expectations Fed policy-makers will leave rates unchanged now that the global financial crisis that leveled several Asian countries and Russia appears to have stabilized for the moment. The November 0.2 percent drop in the PPI was the sixth time this year that wholesale prices have actually fallen. It was the first outright decline since a 0.4 percent fall in August. The PPI had risen by 0.2 percent in October. Energy prices dropped 1.2 percent last month, their biggest drop since August, as gasoline prices fell by 6.9 percent and home heating oil costs were down 5.6 percent. Energy prices have been tumbling as deep recessions in Asia have cut daily world demand by about 750,000 barrels per day. Crude oil prices are now at a 12-year low of around $11 per barrel compared to $23 per barrel a year ago. U.S. farmers have also been hurt by the loss of overseas export markets and falling world prices. In November, food costs at the wholesale level fell by 0.5 percent, the biggest monthly decline since a 0.8 percent drop in June 1997. The November decrease reflected a 16.1 percent plunge in vegetable prices as the cost of squash, cabbage, lettuce and greep peppers all fell dramatically. Pork and fish prices were also lower. Inflation was also contained outside the volatile food and energy sectors. The so-called core rate of wholesale inflation was up just 0.1 percent in November, matching the October performance. >>