Sep 19, 2014
Click here for this week's charts.
New highs in the equity markets were echoed with continued progress in the United States economy. Jobless claims plummeted below expectations which telegraphs another drop in the unemployment rate. The strength and resiliency in the US economy has been remarkable in contrast to the extreme pessimism that was prevalent as recently as 2012. Alibaba? How will the benefits ultimately reach shareholders? With a maze of subsidiaries and offshore companies, shareholders may be left wondering where the money goes.
Producer prices were flat for the month. Consumer prices declined, driven by falling food and energy prices. Consumer Price Index (CPI YOY)
- Graph courtesy of Bloomberg L.P.
U.S. Consumer Prices Drop for First Time in a Year
The cost of living in the U.S. unexpectedly dropped in August for the first time in more than a year, giving Federal Reserve policy makers reason to maintain that interest rates should remain low for longer.
The consumer-price index declined 0.2 percent, the first decrease since April 2013, a Labor Department report showed today in Washington. Excluding volatile food and fuel, the so-called core measure was unchanged, the first time it failed to increase in almost four years.
Muted global growth is leading to a drop in energy and other commodity costs that is preventing inflation from accelerating toward the Fed’s goal. Limited pricing power helped give the so-called doves at the central bank who wanted to keep the benchmark interest rate near zero well into 2015 the ammunition to convince colleagues to go along as they concluded two days of meetings today.
“The doves have the high ground on this one,” said Brian Jones, a senior U.S. economist at Societe Generale in New York, who correctly forecast the drop in prices. “They are not going to do anything with rates for a long time.”
Stocks were little changed as investors weighed prospects for future Fed policy changes. The Standard & Poor’s 500 Index climbed 0.1 percent to 2,001.57 at the close in New York.
- U.S. Consumer Prices Drop for First Time in a Year of Bloomberg L.P.