More Bad News
20th May 2008
While the PPI actually came in lower than expected at 0.2%, the core PPI was up more at 0.4%. This was a solid indication that increasing food and energy prices are starting to impact the rest of the economy.
It did not help that oil made another record high at $129 thanks to the falling US dollar. Can anything stop this commodity’s attempt to reach the stratosphere? I realize that oil is extremely over bought, but I’m certainly not going to bet against it.
To make matters worst, indications from the FED are that it is ready to take a break from interest rate cuts, which seems to confirm what many have thought.
Our cautious attitude towards the markets is not going anywhere. You might even consider a bear call spread on your index of choice while the market heads down to test support.
JD