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« Of Carnival Barkers and Shills | Main | Pew: Bush Job Approval Up »
June 17, 2004

Economic News: Good, with a Touch of Bad

But other things are going on besides the outing of Shrill Shill.

May's readings on inflation were greater than expected:

Prices received by farms, factories and refiners shot up a hefty and more-than-expected 0.8 percent last month, the largest jump since March 2003, the Labor Department said.

While food and energy prices both rose sharply, the department's core producer price index, which strips out those volatile costs, gained a larger-than-expected 0.3 percent, adding to inflation jitters on Wall Street.

They'd expected a .6 rise in CPI, and a .2 rise in the core producer price index.

That's not good for Wall Street.

On the other hand...

Also, a regional manufacturing survey showed strength, though it bore some pockets of softness. The Philadelphia Federal Reserve's June business activity index climbed to 28.9 from 23.8 in May, beating forecasts of a rise to 25.0.

In a separate report, the Labor Department said first-time filings for state jobless aid fell 15,000 to 336,000 in the week ended June 12, their lowest level since early May.

...

Also on Thursday, the Conference Board, a private business group, said its index of leading economic indicators rose 0.5 percent in May to 116.5, suggesting the U.S. economy's momentum is likely to build in the coming months.

Note the word "build." Not "continue." Build. As in quicken in pace.

Finally:

A four-week moving average of claims, which smooths weekly volatility to provide a better picture of underlying trends, slipped 2,750 to 343,250. The average has been hovering since early March near levels not seen since early 2001, before the economy tipped into recession.

Actually, the economy tipped into recession in late 2000, but I take their point.

The markets are reacting fairly neutrally to the combination of inflation worries and very positive economic news. I'm speaking out of my hat here, but I kinda think the markets want that .25 rate hike in June -- or even a .5 hike -- just to get it over with. Maybe it's the current fear of the rate hike -- which everyone knows is coming -- which is keeping markets moving sideways.


posted by Ace at 04:01 PM
Comments



Actually the market has already priced in a .25 hike at the June meeting. It has also priced in at least a .25 hike for the August meeting (a high probability of a .5 hike), and another .5 by the end of the year (meetings in September, November, and December). You can tell by looking at the Fed Funds futures, traded on the Chicago Board of Trade. For those who don't know, the price of these is simply 100-[Fed Funds Rate at Expiration].

So, if there is a hike this month, and it's only .25, then the markets should have little reaction. It could even be a positive reaction, as some investors think that the Fed may not hike rates at a 'measured' pace after seeing perceived signs of inflation. If they only go up .25 that might reassure some of the more worried investors out there.

Posted by: morpheus on June 17, 2004 05:42 PM

Thanks. It's the second paragraph of yours that I mean.

Well, actually, I mean that there may be a psychology out there in which anticipation of the bad future event is actually worse than the occurence of the bad future event.

Know what I mean?

Posted by: ace on June 17, 2004 05:50 PM

Greenspan is trying to do to Bush what he did to his Papa.

Never trusted the Maestro. Too much hubris.

Posted by: Katherine on June 18, 2004 12:47 AM

Actually Ace, yes, I know exactly what you mean. I think Steven Seagal put it best in 'Hard to Kill' when he wrote "Anticipation of Death is Worse Than Death Itself" in blood on the wall, right before he broke the arm of the last bad cop and went to take care of the Senator. That was also the movie that led to the marriage of Seagal and Kelly LeBrock. Good times.

Posted by: morpheus on June 18, 2004 08:52 AM
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What? Skeleton of the most famous Musketeer, D'Artagnan, possibly discovered in Dutch church closet.
Dumas picked four names of real musketeers out of a history book, D'Artagnan, Athos, Aramis, and Porthos. So there was an actual D'Artagnan, though he made most of the story up. (Or, you know, all of it.)*
Charles de Batz de Castelmore, known as d'Artagnan, the famous musketeer of Kings Louis XIII and Louis XIV, spent his life in the service of the French crown.
The Gascon nobleman inspired Alexandre Dumas's hero in "The Three Musketeers" in the 19th century, a character now known worldwide thanks to the novel and numerous film adaptations.
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A lot of Dumas's stories are based on bits of real history. The plot of the >Three Musketeers, about trying to recover lost diamonds from the queen's necklace, was cribbed from the then-almost-contemporaneous Affair of the Queen's Necklace. And the Man in the Iron Mask is based on real accounts of a prisoner forced to wear a mask (though I think it was a velvet mask).
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I don't know, I always thought there was a distinction between mere magic rings and the Rings of Power created by Sauron. But this suggests that Bilbo knew this was a ring of power created by Sauron.
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I never noticed this before. I know Tolkien re-wrote this chapter while he was writing LOTR to make the ring important from the start. And also to make Gollum more sinister and evil, and also to remove the part where Gollum actually offers Bilbo the ring as a "present" -- Bilbo had already found it on his own, but Gollum was wiling to give it away, which obviously is not something the rewritten Gollum would ever do.
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