- The CPI Ex Food & Energy for October rose .2% versus estimates of a .2% increase and a .1% gain in September.
- Business Inventories for September rose .5% versus estimates of a .3% increase and a .4% gain in August.
- Net Foreign Security Purchases for September rose to $101.9B versus estimates of $75.0B and $89.0B in August.
BOTTOM LINE: Prices paid by US consumers in October rose at the slowest pace in four months as energy prices receded from records a month earlier, Bloomberg said. Core prices are now rising at a 2.1% annual rate versus a 2.2% gain at this time last year. The cost of all goods including cars, apparel and food fell .5% last month after rising 2.4% in September. Gas prices fell 4.5%, computer prices fell .8% and the cost of clothing fell .4%. I continue to believe inflation fears have peaked, with gauges decelerating over the intermediate-term.
US business inventories rose more than expected in September, as auto dealers rebuilt stocks depleted by discounting earlier this year, Bloomberg reported. Inventories are at record lows relative to sales. I continue to believe inventory rebuilding will boost economic growth over the next few months.
International investors added to their net holdings of US assets by a record $101.9 billion in September as the world’s largest economy outpaced other developed nations, Bloomberg reported. The US dollar is approaching a two-year high as the report led traders to believe the US has no problems attracting capital to cover the current account deficit. International investors added $24.6 billion to net stock holdings, the largest increase in almost 5 years. Caribbean holdings, which are linked to hedge funds in the region, fell by $500 million. As I predicted a few months ago, international investors’ demand for US assets is increasing and will continue to remain strong over the intermediate-term.
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