|
| 
 
| |
Commentary:
PPI Hammers S&P!
(June 11, 1999)
Stock index futures were hammered today on ideas that the Fed would raise interest
rates. This came on the heals of the Producer Price Index number showing a rise
of .2% and .1% in the core rate. The market believes that this, along with the
strong Retail Sales number, will cause the Fed to raise rates, thus hammering
stocks.
The problem
is that the PPI number is not bullish on inflation and that the Fed should not
trigger a rate hike on the basis of PPI.
One
problem is that PPI and CPI (Consumer Price Index) are flawed in that they measure
inflation in one sector of the economy only, not the total inflation. Just because
consumers are paying more for things does not mean that the whole society is in
the midst of inflation. It's quite possible for other sectors of the economy to
be declining. In today's report we see that crude oil prices are higher but pharmaceuticals
were lower.In fact,
the current report shows deflationary impulses. The price of crude oil is higher
but the value added area of pharmaceuticals is lower.
Inflation
can only occur if the Fed pumps out too much money. Without that, inflation cannot
occur. If the price of one thing in society climbs, then something else MUST fall
if the Fed doesn't pump out money.
We
see this now with some parts of society, such as wages, climbing but others, such
as interest costs and computer prices, falling.
The
best indicator of inflation is the GDP Deflator. This contains all of society
not just subsections. Right now, that is showing that inflation is low. The Fed
should focus here, not PPI.
-
Editor-in-Chief Courtney D. Smith |
| |
| WE
NEED YOUR HELP AT CTCR Online |
|
|
Q: "What
real-time and end of day data vendors have the best value when used with trade
station and super charts? Readers
- please email us with your comments! |
| COURTNEY
D. SMITH IN THE MEDIA | |
| LATEST
ISSUE OF CTCR NEWSLETTER | |
Bloomberg
TV June 15 4-4:45 pm EST
Reuters
TV June 16 4:00 pm EST Bloomberg
TV June 29 4-4:45 pm EST Guest
Host CNNfn July 1 4-5 pm EST More... |
Scale
Trading
Packed
with scale trading related information, this issue tackles the subject with clarity
and focus. Starts with The CTCR Guide to Scale Trading, an in-depth look at what
scale trading is all about. Also: interview with Mary Pagano and a system test
of Barnes Oscillator with ADX Filter. (Find
out more!) (Order) |
People
| Advisors | Profitable
Traders Guide | Reports
Product
& Service Reviews | Q&A Forum | Services
| About CTCR
Order
| Bookstore | Contact
Us | Email Us | Search
Site | Webmaster |
|