The Week Ahead – August 14-18, 2006
Important Economic Reports
There are several important economic reports due out next week which all investors should be aware of. On Tuesday, August 15, 2006, the government will release the core Produce Price Index (PPI). The PPI basically measures prices at the wholesale level. There are three broad subcategories within PPI: crude, intermediate, and finished. The PPI data is important since the FOMC closely watch these numbers to gauge inflation. My prediction is the PPI will be tame, except for the energy sector. The rise in energy price should be of no surprise given the recent events in the Middle East and overall concern over oil supplies. It is my opinion this is already built into the market.
Wednesday, the Core Consumer Price Index (Core CPI) comes out. The Consumer Price Index is a measure of the price level of a fixed market basket of goods and services purchased by consumers. CPI is the most widely cited inflation indicator, and it is used to calculate cost of living adjustments for government programs and it is the basis of COLAs for many private labor agreements as well (finance.yahoo.com, 2006). The core CPI gauges the prices of such things as apparel, tobacco, airfares, and new cars. This is again closely watched by the FOMC. If the Core CPI is above what is expected, it indicates the existence of inflation within the economy. The market was spooked last month because the Core CPI was higher than expected. My prediction is the number will be inline with expectation this time.
There are several other data to be released next week, but these two are probably the most important in respect to the stock market. You can find more by visiting Yahoo! Finance.
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References:
http://biz.yahoo.com/c/terms/ppi.html
http://biz.yahoo.com/c/terms/cpi.html
