Well, the PPI report came out this morning and things are not all that bad. Being one of the key indiactors of inflation, the Producer Price Index also is a pretty good indicator of what the Consumer Price Index will look like when it comes out (later this month, I believe).
Despite an overall increase (0.7%), if you take out oil and food, the increase is only 0.1%. Plus, adjusted for annual terms, the overall "core" level of inflation actually dropped to 2.6% from 2.8% in February.
I think that's a good sign of things to come, possibly signaling that the economy is not in as bad of shape as some investors fear. The markets are opening higher this morning. Let's see if we can get a rally going!
You can read more about the economic reports here.
1 comment:
Even though things closed on the upside today, don't get too excited - not if you believe what the CIO at Merril Lynch has to say:
Corporate profit growth is clearly decelerating, which should trigger the typical mid-expansion pause in the business sector that we have been talking about for some time.
Such a pause will likely include some softening in investment and employment growth, as well as a slowdown in overall economic growth.
Forecasts that the Federal Reserve might stop tightening rates in light of sinking equity prices are, in our minds, premature.
The Fed likely views the run-up in equity, corporate bond and housing prices that has occurred in recent years as signs of excess, and thus will not respond unless a significant financial accident occurs or sizable capital losses accrue.
The combination of a slowing economy and a Fed that is continuing to raise interest rates is a dangerous one for equities.
Until the Fed stops raising interest rates, the environment remains troubling for equity investors.
--Bob Doll, president,
chief investment officer
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