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Posts Tagged ‘consumer price index’

CPI Negative 3rd Consecutive Month; Selective Memory; Perverse Effect of Falling Energy Prices on Imputed Housing Costs

CPI Negative 3rd Consecutive Month; Selective Memory; Perverse Effect of Falling Energy Prices on Imputed Housing Costs

Courtesy of Mish

As expected, as least as I expected, the Consumer Price Index for June shows the seasonally adjusted CPI was Negative 3rd Consecutive Month.

The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.1 percent in June on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the index increased 1.1 percent before seasonal adjustment.

Similarly to April and May, a decline in the energy index caused the seasonally adjusted all items decrease in June. The index for energy decreased 2.9 percent in June, the same decline as in May, with a decline in the gasoline index accounting for most of the decrease. This more than offset an increase in the index for all items less food and energy, while the food index was unchanged for the second month in a row.

The index for all items less food and energy rose 0.2 percent in June after increasing 0.1 percent in May. A broad array of indexes posted increases, including shelter, apparel, used cars, medical care, tobacco, and recreation. These increases more than offset declines in the indexes for household furnishings and operations and for airline fares. The 12-month change in the index for all items less food and energy remained at 0.9 percent for the third month in a row.

One Month Change in CPI-U 

12-Month CPI-U Change vs. Year Ago

Oil and the CPI

For, now the CPI (less food and energy) has been hovering near +1% for about a year. However, it is not really valid to exclude food or energy but the Fed does it to justify their inflationary policies (policies that clearly are not working now).

The jump in "all items" in the second chart reflects the rebound in oil prices in Spring-Summer of 2009 when crude soared from $35 a barrel to close to $80 a barrel.

Of course hyperinflationists were screaming every step of the way, conveniently ignoring the plunge from $140 to $35.

Selective Memories

When it comes to prices, people have selective memories. They remember every penny uptick in gasoline prices, but forget the times they drop. The same applies to most everything else, but energy is very noticeable because people are constantly filling up their tanks.

On…
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Inflationistas Still Can’t ‘Produce The Body’

Joint credit to Jake at Econompic Data and Joshua, The Reformed Broker:

Inflationistas Still Can’t ‘Produce The Body’

Courtesy of Joshua M Brown

May CPI and Core CPI were out this morning.  As we all know, nothing is worth anything anymore.  Until further notice and some change in trend, the discussion simply cannot be about inflation.

Sorry, Inflationistas.  Nothing to see here just yet.  Now if only the drop in cost of living expenditures could become a favorable topic of conversation to counterbalance all the moroseness and hand-wringing…

From EconomPic Data:

Source:

What Stinkin’ Inflation?  (EconomPic Data) 


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Big Blah (CPI)

Big Blah (CPI)

Courtesy of Karl Denninger at The Market Ticker

Oil can and graph with American dollar

From the Bullcrap Lie Society (BLS) of our government this morning:

On a seasonally adjusted basis, the Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4 percent in November, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months the index increased 1.8 percent before seasonal adjustment, the first positive 12-month change since February 2009.

Most of the change was due to energy; gasoline was up sharply (as we saw yesterday in the PPI.)

Core was a literal zero.

Food was up a bit, but I continued to be puzzled by the difference between gasoline and "fuel oil."

Why?  Because "fuel oil" (that is, heating oil) is exactly the same thing as #2 diesel – that is, road diesel fuel.  The only difference is the tax (and the presence of dye in the heating oil to denote that the tax has not been paid.)  But for the legal (tax) issues you can run "heating oil" in your diesel car or truck, and vice-versa – they are identical products.

Used vehicles were also up materially – a reflection of the distortion from "cash for clunkers" still present in the data (it hit its maximum in October at +3.4%)  Prices for new vehicles were also up (again, the maximum was in October) – again denoting the "back-door" bailout of the automakers from cash-for-clunkers.  Unlike the new vehicle deal however, which you got a tax credit for, the buyer of a used car just got plain old-fashioned screwed through price-jacking caused by constraints in supply.  (Just wait though – in the new year when people can’t make the payments on those CFC deals, you’ll see what happens to used car prices…. supply and demand you know.. )

Medical care was up as usual (gee, how come it keeps rising faster than overall inflation?) and shelter costs were down (remember, this is not "housing", as that would expose reality – it is "owners equivalent rent")

All in all a blah report – but given the PPI that’s expected – the fun and games in the CPI report resulting from yesterday’s PPI should show up in a month or two.

 


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A Reader Asks “How Did 558,000 People Lose Their Jobs When Only 190,000 Jobs Were Lost?”

A Reader Asks "How Did 558,000 People Lose Their Jobs When Only 190,000 Jobs Were Lost?"

Courtesy of Jesse’s Café Américain

Obama Here is an excerpt from today’s Bureau of Labor Statistics Non-farm Payrolls report.

"The unemployment rate rose from 9.8 to 10.2 percent in October, and nonfarm payroll employment continued to decline (-190,000), the U.S. Bureau of Labor Statistics reported today. The largest job losses over the month were in construction, manufacturing, and retail trade.

Household Survey Data

In October, the number of unemployed persons increased by 558,000 to 15.7 million. The unemployment rate rose by 0.4 percentage point to 10.2 percent, the highest rate since April 1983. Since the start of the recession in December 2007, the number of unemployed persons has risen by 8.2 million, and the unemployment rate has grown by 5.3 percentage points…

The civilian labor force participation rate was little changed over the month at 65.1 percent. The employment-population ratio continued to decline in October, falling to 58.5 percent."

An astute reader noticed that the BLS press release says that 190,000 jobs were lost from payroll employment, but the number of unemployed persons increased by 558,000. What’s up with that?

The BLS report consists of two independent data samples. BLS has two monthly surveys that measure employment levels and trends: the Current Population Survey (CPS), also known as the household survey, and the Current Employment Statistics (CES) survey, also known as the payroll or establishment survey.

There is the "Establishment Survey" which is based on responses from a sample of about 400,000 business establishments, about one-third of total nonfarm payroll employment. The headline payroll number, the job loss of 190,000, is based on this data.

Then there is the "Household Survey" which is a statistical survey of more than 50,000 households with regard to the employment circumstances of their members, which is then applied to the estimates of the US population to obtain the unemployment number. This survey was started in the 1950′s and is conducted by the Census Bureau with the data being provided to BLS. It is from the household survey that more detailed information is obtained about employment statistics within population groups like gender and age, wages, and hours worked. It is this study that is responsible for the unemployment rate of 10.2%.

So which survey is correct? Neither. The truth is somewhere


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Why the Austrian, Keynesian, Marxist, Monetarist, and Neo-Liberal Economists Are All Wrong

Fantastic dish served up at Jesse’s Cafe.  Highly recommended – especially if you’re a normally intelligent person who can’t understand economics. It has nothing to do with you! Imagine being an inquisitive medical student at the time when blood-letting was used to treat all ills… I loved this: 

"The ugly truth is that economics is a science in the way that medicine was a profession while it still used leeches to balance a person’s vapours. Yes, some are always better than others, and certainly more entertaining, but they all tended to kill their patients."

- Ilene

Why the Austrian, Keynesian, Marxist, Monetarist, and Neo-Liberal Economists Are All Wrong

jesse's cafe, consumersServed by Jesse of Le Café Américain

US Personal Income has taken its worst annual decline since 1950.

This is why it is an improbable fantasy to think that the consumer will be able to pull this economy out of recession using the normal ‘print and trickle down’ approach. In the 1950′s the solution was huge public works projects like the Interstate Highway System and of course the Korean War.

Until the median wage improves relative to the cost of living, there will be no recovery. And by cost of living we do not mean the chimerical US Consumer Price Index.

The classic Austrian prescription is to allow prices to decline until the median wage becomes adequate. Given the risk of a deflationary wage-price spiral, which is desired by no one except for the cash rich, the political risks of such an approach are enormous.

On paper it is obvious that a market can ‘clear’ at a variety of levels, if wages and prices are allowed to move freely. After all, if profits are diminished, income can obviously be diminished by a proportional amount, and nothing has really changed in terms of viable consumption.

The Supply side idealists (cash rich bosses, Austrians, Marxist, monetarist, and deflationist theorists) would like to see this happen at a lower level through a deflationary spiral. The Keynesians and neo-liberals wish to see it driven through the Demand side, with higher wages rising to meet the demands of profit in an inflationary expansion. Both believe that market forces alone can achieve this equilibrium. Across both groups runs a sub-category of statism vs. individualism.

all wrongUnfortunately both groups are wrong.

Both approaches require an ideal, almost frictionless, objectively rational, and honest economy in…
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THOUGHTS ON THIS MORNINGS DATA

THOUGHTS ON THIS MORNINGS DATA

Courtesy of The Pragmatic Capitalist

Another mixed bag of data this morning.  Most alarming is the continuing trend in negative consumer data.  As we all know by now, yesterday’s retail sales data was weak at best – something we’ve been reporting on here at TPC weekly thru our ICSC and Redbook data reports.

Consumer sentiment readings continue to trend in-line with broader spending habits.   This morning’s reading came in at 63.2 – almost 5 points below consensus.  This continues to represent the broader economic themes we are seeing; deflation in the things we own and inflation in the things we need.

conssent

CPI came in flat which is reflective of the sluggish economy.  This morning’s data was in-line with estimates at 0%.  The lack of pricing power across the broad economy is in-line with the lack of expansion in corporate revenues.  There is little demand for goods and even less pricing power.  I’d love to spin this into a positive, but it simply displays the death grip that deflation continues to maintain on the broad economy.

On the bright side, capacity utilization and industrial production posted slight improvements.  This is a clear sign that the recession is likely to end in the upcoming quarter.  Unfortunately, the rebound in both indicators show clear signs of the sluggish and below trend recovery we are likely to see.  It won’t be a technical recession, but it will probably continue to feel like one.

capu

All in all, this morning’s data nicely summarizes the themes we continue to focus on here at TPC.  The consumer is weak, deflation remains the bigger concern and the recovery (if we can call it that) is likely to be far from v-shaped.   As for the markets, complacency remains the name of the game.  Own equities at your own risk – which I believe are highly elevated currently….


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Predicting CPI…

Here’s a couple from Jake at Econompic Data - on CPI expectations and net worth per capita.

Predicting CPI…

So, I got lucky and somehow predicted Q2 GDP the night before the release (as a friend of mine told me, "even the blind chicken gets the kernel of corn"), BUT I’ll try again. Economists (smarter than me) are predicting a month over month CPI print of 0.0%. I’ll go on record here that it will come in lower. To understand my reasoning, lets take a look at details from today’s July import price levels release. Marketwatch reported:

Prices of imported goods fell 0.7% in July, the first decrease since January as petroleum prices declined, the Labor Department estimated Thursday.

Analysts polled by MarketWatch had expected the import price index to fall 0.1%.

Import prices were down 19.3% in the past year, the largest annual decline since the data were first published in 1982. In June, the import price index rose a revised 2.6%, compared with a prior estimate of a 3.2% gain.

In July, imported petroleum prices fell 2.8%, the first decrease since January. The petroleum imports price index is down 49.9% over 12 months. Non-petroleum import prices fell 0.2% in July, and are down 7.3% for the year, the largest 12-month decline since the data began publication in 1985.

We can see below that the change in the import price level was largely driven by the change in fuel (i.e. petroleum) prices.

Now the significance. There has been a very strong relationship between the price level of imports and broad CPI, as changes in the price of petroleum has been the main driver of CPI. Thus, the fact that July’s import prices declined makes me think we may be in for a surprise regarding July’s CPI print. The below chart shows the longer term relationship.

Regardless of the month over month figure, expect a sizable drop in the year over year number. As we can see below, prices spiked last July as the bubble in oil was in full gear. Thus, if prices are flat month over month (as expected), the year over year CPI will move down to -1.9%.

CPI Index

The important question… how do you position for this? I personally own TLT (a long positon in the long bond). My view is if CPI comes in lower than…
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What’s the Real CPI?

What’s the Real CPI?

Courtesy of Mish

Inquiring minds are asking "What is the Real CPI?" It’s a good question, too. However, you can find many widely differing opinions. For example, you will get one answer from the government, a different answer from sites like Shadowstats, and a third opinion from me.

First let’s look at John Williams’ Shadowstats .

alternative CPI measures

That’s an interesting chart, especially given the hyperinflationary bent of John Williams. He pegs the CPI at 2% as of May 2009 and had it at 9% mid-2008 and right around 5% in 2007. In contrast, the official CPI was 5.5% in mid-2008 and 2+% in 2007.

The problem with all of those numbers is they fail to properly take housing into consideration. And housing has been falling like a rock.

what is the real cpi?Should housing be in the CPI? How?

Bear in mind the government considers housing a capital good not a consumption item. Based on the idea that one would be renting a house if one did not own it, the government uses Owners Equivalent Rent (OER) and not housing prices in the CPI. OER is the largest component in the CPI.

By the same measure one might argue that lawn mowers and automobiles are capital goods. Lawn mowers are durable, not immediately consumed, and if one owns buildings and uses lawn mowers to maintain their properties (or if one hired someone to cut their lawns for them), the mowers would indeed be depreciated over time as a capital expense. The same logic also applies to auto leases.

Let’s explore this from a practical standpoint starting with theory.

Consumer Price Theory and Practice

Here are a few excerpts of note from the Consumer Price Index Manual, Theory and Practice By Ralph Turvey.

Page 47: The treatment of owner occupied housing is difficult and somewhat controversial. There may be no consensus on what is the best practice. The distinctive feature is that it requires the use of an extremely large fixed asset in the form of the dwelling itself.

Page 147: The treatment of owner-occupied housing is arguably the most difficult issue faced by CPI-compilers. Equally important it may be difficult to identify a single principal purpose for the CPI.

In particular, the dual use of CPIs as both macroeconomic indicators and also for indexation purposes can lead to


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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!

 
 

OpTrader

Swing trading portfolio - week of September 2nd, 2013

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Chart School

Two Measures of Inflation and Fed Policy

Courtesy of Doug Short.

Note from dshort: I've updated the accompanying charts with the latest Personal Consumption Expenditures price index from the Bureau of Economic Analysis. The annualized rate of change is calculated to two decimal places for more precision in the side-by-side comparison with the Consumer Price Index.

The BEA's Personal Consumption Expenditures Chain-type Price Index for July shows core inflation below the Federal Reserve's 2% long-term target at 1.47%, but for the past four months this indicator has hovered above its narrow range of the previous 12 months. The latest Core Consumer Price Index release, also data through July, is higher at 1.86%. The Fed is on record as using PCE as its primary inflation gauge.

The ...

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Zero Hedge

British Pound Volatility Surges Most Since 2008 As Scottish Referendum "Yes" Vote Looms

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

As we explained previously, the market appeared woefully under-priced for the potential risk of a Scottish "yes" vote. However, this weekend saw the margin between 'yes' and 'no' voters narrowed dramatically (53% "No" vs 47% "Yes" - a 6-point spread now versus a 14 point spread just 2 weeks ago). UK Gilt yields are higher, GBP is falling (its lowest since March) and implied volatility has spiked by the most since 2008 as hedgers pile in, now suddenly fearful.

 ...



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Phil's Favorites

France Needs a "Thatcher Moment" But First a Depression

Courtesy of Mish.

It is amusing reading day in and day out the Keynesian cure for what ails Europe, especially France.

Consider France. Public spending amounts to 57% of French GDP, yet Keynesians want still more. The sad irony is that 100% would not be enough. In fact, it would make matters worse.

France suffers from too much government spending and too much government interference everywhere one looks.

The Problem

On Sunday, in Eurozone Currency Dispute Intensifies: France Wants More ECB Action to Correct Overvalued Euro, Germany Doesn't I summed up the problem.
Inflation Won't Cure France

Contrary to popular belief, inflation will not spur consumer spending. Nor will inflat...



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Insider Scoop

NXP To Supply Apple With Mobile Payment Chips

Courtesy of Benzinga.

Related NXPI Stocks Hitting 52-Week Highs Morning Market Movers

NXP Semiconductors NV (NASDAQ: NXPI) gained three percent in pre-market trading Friday on a report it's providing wireless chips to the Apple (NASDAQ: AAPL) iPhone 6, enabling a mobile payment system.

The Netherlands-based semiconductor company makes so-called Near Field Communications chips that smartphones use to communic...



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's the latest issue of Stock World Weekly. Click on this link and use your PSW user name and password to log in. Or take a free trial. 

Enjoy!

...

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Option Review

Puts Active On Buffalo Wild Wings

Buffalo Wild Wings Inc. (Ticker: BWLD) shares are in positive territory in early-afternoon trading on Thursday, reversing earlier losses to stand up 0.50% on the session at $148.50 as of 12:15 pm ET. Options volume on the restaurant chain is running approximately three times the daily average level due to heavy put activity in the October expiry contracts. It looks like one or more traders are buying the Oct 140/145 put spread at a net premium of roughly $1.45 per contract. As of the time of this writing, the spread has traded approximately 3,000 times against very little open interest at either striking price. The put spread may be a hedge to protect a long stock position against a roughly 6% pullback in the price of the underlying through October expiration, or an outright bearish play anticipating a dip in BWLD shares in the next couple of months. The spread makes money at expiration if shares in BWLD decline 3.3% from the current price of $148.50 to breach the breakeven point...



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All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Sabrient

Six Companies Push Tax Rules Most

Reminder: Sabrient is available to chat with Members, comments are found below each post.

Courtesy of Sabrient Systems and Gradient Analytics

Gradient Senior Analyst Nicholas Yee reports on six companies that are using a variety of techniques to shift pretax profits to lower-tax areas. Featured in this USA Today, article, the companies include CELG, ALTR, VMW, NVDA, LRCX, and SNPS.

Six Companies Push Tax Rules Most

Excerpt:

Nobody likes to pay taxes. But some companies are taking cutting their tax bil...



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Digital Currencies

Disgraced Mt Gox CEO Goes For Second Try With Web-Hosting Service (And No, Bitcoin Not Accepted)

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Mt Gox may be long gone in the annals of bankruptcy, but its founder refuses to go gentle into that insolvent night. And, as CoinDesk reports, the disgraced former CEO of the one-time premier bitcoin trading platform has decided to give it a second try by launching new web hosting service called Forever.net and is registered under both Karpeles’ name and that of Tibanne, the parent company of Mt Gox.

From the company profile:

“TIBANNE Co.Ltd. ...



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Market Shadows

Helen Davis Chaitman Reviews In Bed with Wall Street.

Author Helen Davis Chaitman is a nationally recognized litigator with a diverse trial practice in the areas of lender liability, bankruptcy, bank fraud, RICO, professional malpractice, trusts and estates, and white collar defense. In 1995, Ms. Chaitman was named one of the nation's top ten litigators by the National Law Journal for a jury verdict she obtained in an accountants' malpractice case. Ms. Chaitman is the author of The Law of Lender Liability (Warren, Gorham & Lamont 1990)... Since early 2009, Ms. Chaitman has been an outspoken advocate for investors in Bernard L. Madoff Investment Securities LLC (more here).

Helen Davis Chaitman Reviews In Bed with Wall Street. 

By Helen Davis Chaitman   

I confess: Larry D...



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Pharmboy

Biotechs & Bubbles

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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Promotions

See Live Demo Of This Google-Like Trade Algorithm

I just wanted to be sure you saw this.  There’s a ‘live’ training webinar this Thursday, March 27th at Noon or 9:00 pm ET.

If GOOGLE, the NSA, and Steve Jobs all got together in a room with the task of building a tremendously accurate trading algorithm… it wouldn’t just be any ordinary system… it’d be the greatest trading algorithm in the world.

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