Wednesday, June 14, 2006

Market week update

In the market week preview I mentioned that we would learn a lot from the performance of the market when the PPI and CPI numbers came out this week. The numbers are out, let's take a quick look:

Producer Price Index (PPI): Report is at this link, came out Tuesday. A good report would be 0.2% or less for Core and 0.5% or less for total. The data reported at 0.3% for core and 0.2% for total which is more core inflation but less total inflation, strongly helped by a negative inflation of -0.5% for foodstuffs. The strong core inflation spooked the market, although the market went up before going down yesterday, which shows that perhaps its not all about the inflation.

Consumer Price Index (CPI): Report is at this link, out a few hours ago. Good numbers would be below 0.2% for core and below 0.3% for total. The CPI (technically the CPI-U if you are looking at the report) is up 0.3% for core and 0.4% total. This is above estimates although if you check my predictions from Sunday you will see I predicted it would be above estimates. Despite this inflationary data the market is up, which I believe is the iportant sign of a stregthening market that we have been looking for. I will be moving my cash back into the market (two weeks ago I suggested a move to cash , if you did so you've made about 4% by not being in the downswing.)

Now seems like a good time to get back in. The market is shaking off bad news and there isn't a lot of new next week.
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