Dangerous Deflation Levels
Posted On Thursday, August 20, 2009 at at 11:24 AM by Finance FanaticLast month, many threw out the notion of the fear of deflation due to higher than expected PPI and CPI numbers. I cautioned at the time, that there were still many other contributing factors pointing to a deflationary down spiral and that one month of positive growth was nothing significant. On Tuesday, PPI numbers once again came in worse than expected with a NEGATIVE trend (-.9%). Sure, there is a lot of influence with the radical movement of energy prices as of late (which will require some more analysis), but such numbers have us flirting with serious problems.
Housing Starts also disappointed the market's expectations as new development is still severely struggling. Despite these very critical readings, however, the market is still finding some way to go up the last couple of days. Still, volume remains very low as most investors are finding it safer to hold onto their cash at this point. I believe we are week, maybe even days away from the big turn in the market. I will make sure to keep the site updated much more during this critical time. Happy Trading.