Gauging inflation is always a tricky business, but rarely more so than in the spring of 2005. Today’s report on producer prices from the Labor Department is merely the latest clue suggesting as much.
Author Archives: James Picerno
TO FIGHT OR NOT TO FIGHT?
Should equity investors fight the Fed?
Absolutely, writes Ed Yardeni last week in a report to clients. The chief investment strategist at Oak Associates is bullish and he isn’t going to let any central bank threat of higher interest rates stand in the way of optimism. “I continue to place my bets on the bull,” he asserts. And just to make sure no one misunderstands, he clarifies his view of the morrow in no uncertain terms: “There is no foreseeable reflation, stagflation, deflation, or recession in my outlook.” Take that, pessimists and nattering naybobs of negativism.
DON’T WORRY, BUY BONDS
The catalyst for today’s red ink on Wall Street is widely explained as IBM and its disappointing earnings report. Big Blue earnings per share in fact did surprise on the downside with 85 cents a share for this year’s first quarter, well below the roughly 90 cents that analysts were generally expecting.
HEY, JOE, WHERE YOU GOIN’ WITH THAT CREDIT CARD IN YOUR HAND?
Has the day of reckoning for the consumer begun? No, not quite. But the economic observers who’re warning that Joe Sixpack’s debts are set to cast disorder far and wide in the economy have another statistical release to dangle in the face of the optimists.
CONSUMPTION ECONOMICS
In the good old days of energy shocks, consumers cut back when prices jumped. But cutting back is no longer popular sport in the current bull market for oil.
FOLLOW THE LEADER
The U.S. balance of trade slipped to another all-time deficit in February–$61 billion vs. $59 billion in January, reports the U.S. Census Bureau. If you thought the news would take a hefty bite out of the dollar, you were mistaken. By the close of Wall Street trading today, the dollar gained ground against the euro and yen.
BY ANY MEANS NECESSARY
Not everyone’s worrying that rising crude oil prices will impair economic growth, but you can count the bond market in as one more pessimist.
WHAT GIVES?
It’s clear that the dollar’s been falling, but what does it mean, Horatio? What does it mean? Different things to different people, comes the reply from the financial gods on high.
RHETORICALLY BESMIRCHING?
It’s not every day that a president raises questions about the bonds issued by his country. Thanks to competition, a government tends to give the other guy’s debt a hard time in one way or another.
DANGEROUS LIAISON
If you thought the subject of oil was a bit far afield for the steward of the nation’s money supply, think again. As Alan Greenspan rides into the sunset of his final months as head of the central bank he told the National Petrochemical and Refiners Association conference in San Antonio, Texas yesterday that market forces should be allowed to prevail when it comes to the price of oil.