Monday, July 13, 2009

Importing Deflation?

Markets remain volatile, thus while there is concern that a weak dollar will result in commodity prices once again rising, if green shoots continue to shrivel than import prices will likely reverse the recent ascent. Marketwatch reported on Friday:

Prices of imported goods rose 3.2% in June, the largest increase since November 2007 and the fourth consecutive monthly gain, as petroleum prices shot higher, the Labor Department estimated Friday. Analysts polled by MarketWatch had expected the import price index to rise 2.5% in June. Despite the monthly gain, import prices were down a substantial 17.4% in the past year.

In May, the imports index rose a revised 1.4%, compared with a prior estimate of a 1.3% gain. In June, imported petroleum prices increased 20.3%, the largest monthly gain since April 1999 and the fifth consecutive monthly increase. However, the petroleum imports price index is down almost 46% over 12 months.

Since the June 30th date in the above chart, oil has dropped $14 a barrel (~20%), thus expect the recent rise in non-manufactured goods to reverse course in July.

Source: BLS


  1. market breakout.
    This could be running till 10,000?
    Current market pe based on trough earnings - so abit irrelevant.
    A few good earnings results might force all the fund managers with hedged neutral positions to go long.

  2. i like the enthusiasm, but what's that have to do with import prices?

  3. "Anonymous person, using your same judgement of PE reflecting current trough earnings and so irrelevant, why would the market go higher due to upcoming earnings, they are already priced in. The question is what will happen in the future. The key is in retail sales, jobs, and credit. What have they been doing: Jobs = continued losses --> depressing consumer confidence; credit shrinking (as long as toxic assets are on banks sheet, this will continue); retail sales, ...that'll be your homework. Look those up over the last 3 months. Tell me if you see any signs of a RECOVERY, not a stabilization which is what they have shown so far.