WHOLESALE PRICES SURGE BY MORE THAN DOUBLE ESTIMATES
August 19th, 2008WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
And, yep, not only is the dollar higher, the U.S. Dollar Index is at a one year high. The dollar is at a six month high vs. the euro.
How can that be?
FOREX participants might see Bernanke being forced to * gasp * raise interest rates. I don’t see how else the dollar is up on this news.
Additionally, equities might be tanking because insiders know what a rate increase would mean for stocks. (Not good.)
Via: Reuters:
U.S. wholesale prices took another unexpectedly steep jump in July and shot up at the fastest year-on-year rate in 27 years, according to a government report on Tuesday that was certain to fan fears about a potential surge in inflation.
The Labor Department’s Producer Price Index, which measures prices at the factory door, climbed 1.2 percent after a 1.8 percent gain in June. But so-called core producer prices, which exclude food and energy, jumped 0.7 percent in July after a 0.2 percent June increase.
The steep jump in core prices rattled financial markets, driving stock futures down and causing futures markets to scale up the odds for an interest-rate hike this year by the U.S. Federal Reserve. The dollar gained in value on the prospect of higher rates.
The rise in monthly core producer prices was the strongest since November 2006 and implied that price gains were spreading outside the food and energy sectors, certain to trouble Fed policy-makers who want to prevent price pressure from gaining too strong a foothold.
Analysts said some of the July price jump was likely caused by higher prices for motor vehicles, which was unlikely to be sustained given that sales are sluggish.
“There is evidence of pass-through of wholesale prices to retail, but manufacturers are being squeezed for their cost of inputs without much success in passing them through to customers,” said Dana Saporta, an economist with Dresdner Kleinwort Securities LLC in New York.
Core producer prices rose 3.5 percent on a year-over-year basis in July, the strongest increase since mid-1991.
Economists polled by Reuters had expected producer prices to rise 0.6 percent in July, half the actual increase, and had forecast that core prices would be up only 0.2 percent.
I used to be a subscriber to the Wall Street Journal – gasp – and I can’t believe that as time flies – it was almost 20 years ago that my Professor at college said it was required reading. I also said to hell with this piece of shit newspaper after all of editorials published during the run-up and run-offs of opinion pieces published in that paper after the start and all the ennui articles published re Iraq.PHHLFT.
Bullshit stuff. I’d rather support Cryptogon thank you.
Last week, just for grins, I bought a WSJ while on travel. This paper reported that prices on food had increased 31 per cent or more since last year. 31 per cent!
If that’s not inflation what exactly is inflation supposed to mean?
Granted, whoever publishes numbers and statistics can publish whatever they want. But this was a shocker for me.
I don’t think we are being given half, or even a quarter of the truth about the U.S. and/or world economy in the media.
I don’t know what to think about the U.S. dollar rising. It is to me, more chicanery and cheap trick majic, so to speak.
There is a situation that exists in the world today wherein the entire rug could be pulled out under the U.S. dollar if certain countries such as Japan, Russia, or China just says no to giving the U.S. more credit on the “us dollar credit card.”
I for one think the U.S. economy is on the brink of sink. Swimming is probably not an option. I also have no answers or opinions as to how we can rescue ourselves as I do believe we are on the Titanic and hit the iceburg a long time ago. I think one more 9/11 or Katrina like event where the U.S. must call upon its Treasury for the spare change needed to cover costs will sink this nation, not to mention the dollar as the world currency. And yo, I’d be posting an political astrology column if I knew how to. But things are not looking good friends. Seriously. I have to travel for work in September, and I’m going to have my last will and testament all in order before I go. I think that this administration, rather than go down in history as the rapier that led to the destruction of the U.S. dollar and world economy still has within its bowels an evil spell that it is still working to conjure. Yah, late September. Or well, maybe on the anniversary of 9/11.
I think that whatever this evel spell they are brewing will be the end of the world as we know it. Hide,and watch.++++++++
If I had the cash I’d be buying a lot more gold and silver right now. Just because the dollar now, more than any time in its history -represents itself as a piece of debt. And when the dollar represents debt, rather than prosperity, I say get the hell out out of it to the extent possible.
Food, water, shelter. For months.
I think being prepared is the motto of a happy camper.
I don’t mean to scare – just think ahead. There are evildoers out there- but I don’t think they will ever crush us.