Daily Market Commentary for October 14, 2011
According to Commerce Department, in September, U.S. retail sales jumped 1.1% striking the biggest increase in seven months as consumers bought more autos, clothing and home furnishings. (read more at Millennium-Traders.Com)http://www.millennium-traders.com/news/newscommentary.aspx
Group of 20 industrialized and developing nations meeting today and Saturday in Paris European finance ministers will find themselves under heavy pressure to find a solution to the regionâ€™s long-running debt crisis. The Group is not expected to produce much in the way of concrete proposals, but could help lay the groundwork for a solution ahead of a crucial meeting of euro-zone leaders next weekend and a summit meeting of G-20 leaders in Cannes, France, in early November. The focus is likely to be on efforts to boost the firepower of the International Monetary Fund. The emerging-market countries are examining ways to enhance the IMFâ€™s lending power through a special purpose vehicle or through buying special IMF bonds. The aim is to allow the IMF to play a greater role in any European rescue and in particular, the ability of the IMF to provide credit lines to Italy or Spain and to aid in the recapitalization of euro-zone banks. The action would be welcome given worries about the limited capacity of the euro-zone bailout fund, the 440 billion euro ($604 billion) European Financial Stability Facility. The EFSFâ€™s enhanced powers would enable them to buy government bonds, provide credit lines to troubled sovereigns and help capitalize banks. The bailout mechanism is still viewed by many economists as too small to prevent Italy or Spain from being engulfed by the debt crisis. U.S. Treasury Secretary Timothy Geithner commented that he would attempt to generate support for a renewed global effort to combat the risk of slower growth. He also said Europe must face the â€œhard partâ€ of designing a more effective and comprehensive strategy to end the financial crisis. He said the United States should do its part by adopting President Barack Obamaâ€™s jobs plan and called on China to let its currency appreciate more rapidly.
The Weekly Leading Index (WLI) growth indicator of the Economic Cycle Research Institute (ECRI) shows the U.S. economic growth hit a 57-week low, posting its weakest reading since September 2010. For week ending October 7, economic growth was -9.6% striking the biggest decline since September 3, 2010, when it was -9.8%. According to the WLI, the U.S. economy's strength has been declining since May and went negative in August. ECRI, which cautions that moves in the WLI must be prolonged and persistent before the readings can be called a trend, said in late September the U.S. economy is headed for a new recession that government intervention cannot prevent.
During September, U.S. import prices made a surprise rise by 0.3%, according to government data, in the latest indication that inflation is persistent even with a weak labor market. August prices were revised to show a 0.2% drop against an initially reported 0.4% decline. Fuel prices edged up 0.1% even as monthly gasoline prices slipped to $3.61 a gallon from $3.64 and imported fuel prices have dropped three of the past five months. Industrial supplies and materials drove a 0.2% gain in non-fuel prices. Imported consumer goods rose for the fourth straight month. Prices of imported cars edged up 0.1% after a strong month of sales. Import prices are up 13.4% compared to September 2010 with fuel prices up 43.4% and the prices of nonfuel imports have gained 5.5%.
Consumer sentiment reportedly declined to 57.5 in October from 59.4 in September. Sentiment reading covers how consumers view their personal finances as well as business and buying conditions; and averaged about 87 in the year before the start of the most recent recession.
During August, the Commerce Department reported that U.S. business inventories climbed a seasonally adjusted 0.5% compared with a revised 0.5% increase in July. Sales rose 0.3%, while the inventory-to-sales ratio was flat at 1.28.
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