FYI | May 14 2007
By Greg Peel
It was all just a bad dream.
The US producer price index was released on Friday night and came in at zero – implying a year-on-year wholesale inflation rate of only 1.5%. Suddenly, everything is alright again.
Thursday’s sell off – apart from being an overdue pullback from ongoing new highs – was all about inflation fears being rekindled by both the Fed’s comments and the import price and jobless claims statistics. And retail companies posted some bad quarterly sales results. But it was clearly a knee-jerk reaction.
On Friday night, the monthly retails sales figures for the US showed only a 0.2% decline – not as bad as might have been expected. And when you combine that with the PPI figure well…maybe the next Fed move will not be a rate hike. It might even be a rate cut. Let’s buy!
Following a 111 point rise in the Dow on Friday, tonight brings the CPI figure. That might be interesting. China will release its CPI during the day. The UK will release its CPI on Tuesday night and Europe on Wednesday.
It’s a quiet week for economic data in Australia. Monday sees the March housing finance numbers, Wednesday the first quarter wages price index and the Westpac/Melbourne Institute consumer sentiment measure. Thursday brings the Westpac/MI inflation expectation indicator and first quarter average weekly wages.
In the US, we also learn housing starts and building permits for April on Wednesday, and capacity utilisation on Thursday, along with the closely watched Philadelphia measure of economic activity.
The SPI Overnight also bounced back by 67 points on Friday, and gold managed to stage a small rally back from precipitous lows. Perhaps this week will start off without any talk of a Rio Tinto takeover. Perhaps.