While Producer Price Index will drop heavily, a steady increase in core PPI will indicate the economy is strong and healthy – futures market telling something else
Marla Guthrie
Oct. 15, 2006

The producer price index to be reported on September 17th around 8.30 AM will show a solid 0.6% drop. However, excluding food and energy the core index is expected to rise 0.2%. What that will show is that the economy is health and the Fed is no hurry to reduce rates.

The drop in gasoline prices, natural gas component will counterweigh the slight rise in food prices. When you take the food and energy out the core PPI will show health signs. An annualized core PPI increase of 2.5% is health, according to experts.

However, a stochastic model that considers price and momentum in futures markets is telling a different story. It seems that the grains prices are poised for a very fast acceleration on the upside. The energy component will recover fast within a bear market scenario. The softs are building base to rally again. That shows commodity inflation is actually alive. Fed will realize the same in coming months. The Fed can unexpectedly continue to raise rates in spite of stagnation in the economy.

That can be catastrophic in general. Most likely US Dollar index will benefit and is already expecting some fast actions. The bond market will collapse and will hurt the stock market.

In 2007, Fed will realize its mistakes and will lower rates sharply as crude oil will trade below $40 a barrel and grain prices will trade much higher. The economy for the next six months will be unusually strong. But after six months deflation will take hold and things will fast deteriorate.

While Producer Price Index will drop heavily, a steady increase in core PPI will indicate the economy is strong and healthy – futures market telling something else
Marla Guthrie
The drop in gasoline prices, natural gas component will counterweigh the slight rise in food prices. When you take the food and energy out the core PPI will show health signs. An annualized core PPI increase of 2.5% is health, according to experts.
READ MORE>>

While NY Fed survey will show weakness, the Philadelphia Fed survey will show solid strength – how do interpret the mixed signals?
Mike Moran
Economists are struggling to make out the real picture from the two results. In order to know more and understand what is happening behind the scenes, you need to look at the two surveys and how they are reported.
READ MORE>>

A slightly lower Capacity Utilization will further show lower inflation pressures but a long term topping action is sending scary signals
Alan Hershey
On 17th around 8.30 AM a very interesting stat will be out – the capacity utilization. The market is expecting 82.1% from prior 82.4%. It will be bullish for stocks and bonds. The slightly lower number shows healthy economy with less inflation pressures.
READ MORE>>

The leading indicators will surprise every one and the dollar is set to rally on that
Sam Adelton
The new orders, jobless claims, money supply, average workweek, building permits, and stock prices all will points higher.
READ MORE>>

Housing Starts will show weakness like never seen before since February 2003 - a recession eminent?
Fred Day
While some economists are expecting a surprise from the builders on the positive side, the number most likely will show slump. Housing Starts will show weakness like never seen before since February 2003.
READ MORE>>

MORE ARTICLES >>