Friday, May 15, 2009

Mish Reports "Wholesale Prices Post Largest 12-Month Decline Since 1950"

You can't get better information about the future of your pocketbook than to keep up with Mish (Mike Shedlock).

Inquiring minds are investigating the Producer Price Indexes For April 2009. The Producer Price Index for Finished Goods increased 0.3 percent in April, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This rise followed a 1.2-percent decline in March and a 0.1-percent increase in February. At the earlier stages of processing, prices received by producers of intermediate goods moved down 0.5 percent following a 1.5-percent decrease a month earlier, and the crude goods index advanced 3.0 percent after declining 0.3 percent in March. The index for finished goods less foods and energy edged up 0.1 percent in April following no change in the previous month. In April, higher prices for light motor trucks, pharmaceutical preparations, and consumer plastic products slightly outweighed lower prices for civilian aircraft, tobacco products, electronic computers, primary batteries, and non-wood commercial furniture. Finished Goods PPI (click here for table). Although the above table shows an increase of .3% compared with last month, year over year comparisons have been negative for 5 consecutive months. Moreover, prices of light duty trucks were up in April. That will not last long because dealers must cut prices to liquidate inventory. In turn, 2009 inventory liquidation will negatively impact demand for cars and truck in 2010. Intermediate and Crude Goods PPI (click here for table). The table shows that in spite of crude prices rising from $35 in December to over $60 in May, that year over year comparisons are very favorable. Those comparisons will remain favorable for many months to come judging from energy prices. $WTIC Light Crude Weekly Chart (click here for chart). The above chart shows that year over year energy prices are going to be increasingly favorable at an accelerating rate for 3 months, then favorable at a decreasing rate for another 4-5 months. Thus I expect to see finished goods, intermediate goods, and crude goods prices to drop every month (year over year) for a full year. Gasoline Prices - Where To From Here? Inquiring might be asking about gasoline prices in the short term. Let's consider some technical and fundamental factors starting with the following daily chart of crude prices. Click here for rest of article.
Wake up! Suzan ____________________

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