Tuesday, August 10, 2010

Market comments for Aug. 10th (Update)

Economic data released this morning showed Q2 Productivity was the lowest since Q4 of 2008. It came in at -0.9%. Expectations were for +0.1%. Unit Labor Costs rose slightly +0.2%. Expectations were for them to rise 1.3%. Later this morning, data for Wholesale prices will be released. Expectations are Wholesale prices will be at 0.0% gain. I expect it to go negative, showing deflation but 0% is still amazing when you think about it.

Then the big item today is the FOMC will be releasing its rate decision and comments at 2:00pm EST or 11:00am PST., which is being anticipated with some anxiety. People want to know how the Fed will react to deflation and whether there will be more easing of Interest rates. Will the Printing Presses roar printing new money faster than it can be used. The worry had been Inflation but there appears that is not what the Fed is now concerned about. It's Deflation, just like in the 1930's.

Futures are down 105 points on the Dow.


Above is the chart from Haver Analytics of Unit Labor Costs. Trend is pretty bad indeed. Looks like another piece of data showing deflationary times ahead to me

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