Tuesday June 6, 2006 - 10:48:23 GMT
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Ben's throwing heat
â€śAll pitchers are liars or crybabies.â€ť
FX Trading â€“ Benâ€™s throwing heat
It may be late in the game, but Benâ€™s still on the mound throwing heat. He just blew a rising fastball by the number three hitter to end the inningâ€¦
â€śIn a speech at the International Monetary Conference in Washington, D.C., yesterday Mr. Bernanke said increases in core-inflation measures that strip out food and energy prices over the past three and six months "are unwelcome developments."
â€śBut the Fed chief also noted that the U.S. economy is entering a "period of transition," with growth moderating, consumer spending slowing and the housing market cooling. However, fixed-income investors zeroed in on his inflation views,â€ť reported The Wall Street Journal.
EURUSD: As night follows day, back into the range we goâ€¦
â€¦and just in case some didnâ€™t believe there is still an element of spec in the metals, gold, silver, and copper headed south soon after Mr. Bâ€™s inflation vigilance hit the wiresâ€¦.not to mention the adjustment in the stock market.
I guess we didnâ€™t need Maria for any interpretation this time.
But, then again, weâ€™ll take any help we can get. A friend forwarded this view from Brian Wesbury and Bill Mulvihill, â€śItâ€™s Not the Eighth Inning Yetâ€ť:
â€ś[W]e are skeptical that the May employment data signals a serious slowdown in the labor market or the overall economy. While non-farm payrolls increased by a less-than-expected 75,000 in May, the Household Survey (which has been a more accurate measure of labor market strength for the past three years) reported a 288,000 increase in jobs during May and is up 2.5 million in the past year. The unemployment rate is at a post-recession low of 4.6%, and while average hourly earnings increased by just 0.1% in May, they increased by 0.6% in April, and are up 4.2% at an annual rate in the past six months.
â€śThe job market is still strong and wages are rising faster than inflation. Despite the willingness of the market to believe that any apparent weakness in the data is a clear sign of an economic slowdown and justification for the Fed to stop hiking rates, our models suggest that the Fed has not yet reached neutral. Call it the seventh inning. Rates should, and most likely will, continue to rise, while the economy continues to grow strongly.â€ť
What inning we are not sure. But Big Ben looks like heâ€™s in a zone.
Jack Crooks, Black Swan Capital
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