PPI Negative
Posted On Wednesday, October 21, 2009 at at 11:11 AM by Finance FanaticAll the talk these days seem to be focused around inflation as gold values continue to rise and the dollar continues to sink (at the moment). However, I have continually expressed my concern for an initial deflation problem to hit markets, prior to inflation. Sure inflation is a worry for me as well, due to massive government spending/printing, with huge tax revenue losses for the government, however I believe we really see the problem of inflation deep into 2010 and 2011.
Yesterday, we saw the PPI (Producer Price Index) once again show a negative reading. This number has been bouncing back and forth the past couple of months, but many analysts felt that the negative days were over. Well, not quite. PPI came in at a loss of .6 after having a 1.7 gain the prior month. Indeed, such a trend shows that deflation is not out of the woods and in fact is still a real concern. Markets keep behaving a bit unorthodox, but some things are harder to fight and cover up and deflation is one of those things.
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Markets are a bit higher today, thus far, however we are heading into redemptions season, which as we saw last year, can provide some serious selling pressure. The battle of "perceived favorable earnings" vs discouraging economic data continues. However, there becomes more and more obstacles for businesses in producing "favorable earnings." Happy Trading