Cary Leahey
Cary Leahey
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The Fed might skip (raising rates in) September -- but you have to remember that how the world looks today and how it looks on September 20 could be a lot different -- a lot worse or a lot better.
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You got a favorable surprise on the CPI. We had the first decline in the core rate in 21 years, ... It just reminds the Fed, which said last week that the risks of inflation and deflation were almost equally balanced, that you still have some very residual deflation risk. And it ... supports the notion that the Fed might not have to raise interest rates at all next year.
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Yet another survey of the economy is suggesting sustainable strength. Rates backed up a little because of this report, but you're treading water a bit because of payrolls data lurking on Friday.
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The important thing is not whether the Fed can ease but the fact that people can even ask that question and some intelligent people say if the Fed raises rates in September, it would be a public relations disaster.
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The bond market took this report as a sign that core inflation may be bottoming and the Fed may still be in the tightening business later this year.
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The bond market doesn't really care about the payrolls data now because you're even getting the crazy question asked about whether the Fed can ease.
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I lean toward a half point instead of a quarter. The Fed wants to shore up confidence, to show that, unlike the European Central Bank, it feels your pain.
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It's certainly an impressive number, it's the lowest since early 2001.
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Even though the PPI has accelerated, it hasn't passed over to consumer goods prices, and it hasn't passed through into wage gains,
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These are the kinds of things that raise eyebrows at the Fed. The implication that this January report has for wage inflation is bothersome to the market and the Fed.
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This is one of the days when nobody is really going to care because the employment report was definitely weak.
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A Fed move in late summer is a high probability bet right now.
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One cannot deny that Katrina ironically may have had a positive effect on this index because of the big surge in orders.
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Companies aren't afraid of being left in the dust; they're afraid that if they go first they'll be eaten by sharks, ... Everybody is standing in front of the turnstile, and nobody wants to go through.