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Were Inflation Concerns Overblown?

  • Written by Syndicated Publisher No Comments Comments
    August 22, 2014

    Concerns were spiking a couple of months ago that the Fed’s easy money policies, and the recovering economy, finally had inflation showing up. The PPI, CPI, and PCE inflation indexes jumped above the Fed’s comfort level of 2%, while the employment cost index also unexpectedly jumped in the 2nd quarter.

    In the background commodity prices were rising, crude oil back above $100 a barrel. And the historic hedge against inflation, gold, was rallying again.

    However, last week it was reported that the Producer Price Index (PPI), which was up 2.1% in April, 2.0% in May, and 1.9% in June, was up only 0.1% in July.

    And yesterday, it was reported that the Consumer Price Index (CPI), which was up 2.1% in June, was up only 0.1% in July.

    Was it just a one month reprieve?

    Perhaps not, at least based on the the way crude oil prices and gold have given up their rally attempts.

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    New Housing Starts – the longer-term picture.

    Housing starts created some excitement this week, jumping 15.7% in July to an annual rate of 1.09 million from 945,000 in June, better than the consensus forecast of 975,000.

    They’re not quite as exciting when looked at from a longer-term view, better than they were at the worst of the financial meltdown, but still depressed, well below their level of 15 years ago, about where they were in early 2008.

    Historical Data Chart

    To read my weekend newspaper column click here:   Bonds Persist in Their Warning About the U.S. Economy

    Images: Flickr (licence attribution)

    About The Author – Sy Harding, Street Smart Report

    Sy Harding publishes the financial website Street Smart Report Online and a free daily Internet blog at Sy’s Free Blog. In 1999 he authored Riding The Bear – How To Prosper In the Coming Bear Market. His latest book is Beat the Market the Easy Way! – Proven Seasonal Strategies Double Market’s Performance!

    It includes our research and analysis on the economy and markets, and provides charts and buy and sell signals on the major market indexes, sectors, bonds, gold, individual stocks and etf’s, including short-sales and ‘inverse’ etf’s.

    It provides two model portfolios as guides. One is based on ourSeasonal Timing Strategy, one on our Market-Timing Strategy.

    In depth updates are provided every Wednesday, with interim ‘hotline’ updates every time we make a trade. An 8-page traditional newsletter Street Smart Report is provided on the website every 3 weeks, in pdf format for viewing or printing out.

    There is the Street Smart School of online technical analysis ‘seminars’,commentaries to keep you ‘street smart’ about Wall Street, and much more. 

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