Posts Tagged ‘PPI’
May 14, 2014
I’ll move myself and my family aside
If we happen to be left half alive
I’ll get all my paper and smile at the sky
For I know that the hypnotized never lie
— The WHO
I’d like to follow-up yesterday’s blog post and the dilemma for the Fed in regards to low inflation and low wages, as in, which way will interest rates turn? Today the bond yields dropped in spite of a much higher PPI (producer price index), which measures wholesale inflation. If producers cannot pass higher input costs onto the consumer, profits will suffer. Tomorrow, the BLS will release the consumer price index, CPI, which is expected to be up 0.1 percent on the core and 0.3 percent on the headline number. If the data is higher than market consensus it will be interesting to see if the BONDS and NOTES shrug off inflation fears and continue the recent rally. The price of the 10-year note closed above the 200-day moving average for the first time in two months, even as the 30-year bond has been above the 200-DMA for the same period of time. The rally in the 10-YEAR NOTE acted to flatten the curve but I warn you, readers, that this curve is far from being flat by historical measures. Two-hundred eighteen basis points is far from being flat and again I remind readers that a year ago the 2/10 curve was a much flatter 145 basis points.
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Tags:10-year note, 30-year bond, BLS, CPI, Euro, Fed, FOMC, Janet Yellen, Mario Draghi, PPI
Posted in data, Debt Market, ECB, Europe, Fed, United States | 13 Comments »
June 13, 2011
Before I discuss the Financial Times piece penned by Larry Summers today titled, “How to Avoid Our own Lost Decade,” and tomorrow’s economic releases, Alan Greenspan answers to continued criticism from Notes From Underground in a recent interview in Newsweek:
Yet as the interview neared its end, his tone belied his agitation. “I am as sensitive as anybody. But criticism doesn’t bother me that much. I know with certainty that two plus two equals four, and I don’t need help to make that judgment.”
Now, let’s look at tomorrow’s economic releases. The closely watched RETAIL SALES is projected to be weak as consensus has the headline down 0.5% and ex-autos and gas the data looks to be up 0.3%. The PPI is also to be released and the headline number is expected to be a tepid 0.2%.
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Tags:Bernanke, Fed, Greenspan, Keynesian, portfolio balance channel, PPI, QE2, retail sales, S&P
Posted in Equity, United States | 2 Comments »
May 11, 2011
If the prices of commodities are falling because of increased margin requirements on ENERGY and PRECIOUS METALS, WHY DOESN’T THE FED JUST ASK FOR EMERGENCY POWERS TO CONTROL MARGINS FOR ALL INVESTMENTS? Chairman Bernanke is on the record as believing that INFLATIONARY PRESSURES ARE TRANSITORY. Well, it seems that the power to make higher commodity prices transitory is to raise margins and force the speculators to disgorge their positions. The increase in MARGINS and the RESULTING LIQUIDATION WOULD ALLOW THE FED TO MAINTAIN QE POLICIES WITHOUT THE FEAR OF TRANSITORY PRICE INCREASES.
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Tags:Axel Weber, Bernanke, bonds, BRICS, central banks, Chinese, Commodities, Dollar, ECB, energy, Equities, Euro, Eurocrats, Fed, inflation, margin requirements, Mario Draghi, PPI, precious metals, real estate, retail sales, transitory, Trichet
Posted in Commodities, ECB, Europe | 4 Comments »
December 13, 2010
Something to put on your radar screens for the new year: contingent capital, or CoCo bonds. These instruments are contingent convertible and will be a very respected form of TIER 1 capital under the foggy regulations of Basel 3. The regulators like these instruments as they are DEBT that converts to equity if/when the bank-in-question’s equity/capital ratio falls below a certain level. Rather than the BOND holders getting a free ride and the equity owners bearing the burden with an equity raise, the CoCos will automatically convert to EQUITY, which will lower the level of DEBT and increase equity capital to a regulatory acceptable level. Credit Suisse announced it’s going to do a $30 billion CoCo so you can be certain that other large multinational banks will be joining in. It has yet to be determined what effect CoCos will have on the markets overall. If its popularity catches on, as I suspect, it could provide a boost to the global behemoths as it would lower the need to float more stock to reach the needed capital levels.
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Tags:Bernanke, Canada, CoCo bonds, Credit Suisse, Debt, equity, Fed, FOMC, Mark Carney, PPI, QE2, RBC, retail, Ron Paul, trade balance
Posted in Canada, Debt Market, Federal Reserve, FOMC, United States | 3 Comments »