Certainly, some risk remains that downward momentum will emerge. Personally, I worry about the plight of big population states like Florida and California, where the housing correction is having its severest impact. I note the reports issued by express shippers and ground transportation firms that show deceleration in year-over-year trends in pre-holiday traffic across the nation. I realize that Wal-Mart Short Swing Trading and other large retailers have seen a slowing in same-store sales growth, that shopping mall traffic is down, and that the restaurant businessa not-insignificant part of the service sector that employs 14 million Americansis showing signs of strain as customers migrate from casual dining to more affordable fast-food providers. And, if you parse the data for the third quarter, you will see a pretty stout guesstimate of inventory accumulation. These are prototypical signs of an economy in stress.

Yet, before each FOMC meeting, I consult 35 CEOs from a broad range of businesses, and with the exception of homebuilders, not a single one of them feels the economy is at risk of falling off the table. Big builders and engineering firms report a booming domestic infrastructure business, especially in the petrochemical sector from Turn $200 into $4630 in 30 Days the Gulf Coast up through the lower Midwest. The tech folks continue to find demand briskas manifest in earnings reports of Microsoft, Apple and others.

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commodity index trading

Recent readings on inflation have not been encouraging. The rate of increase in the core personal consumption expenditures price index, or core PCEthat is, what people buy, except food and energywas 2.2 percent over the 12 months ending in January. Yet, its headline counterpart commodity index trading, which includes food and energy, increased an alarming 3.7 percent over the same time frame. Both core and headline PCE figures have been following an accelerating trajectory over the past several months. If you annualize the change in the PCE over the most recent three-month period, for example, youll notice that the core rose 3 percent, while headline rose 5.4 percent.

Clearly, food and energy prices matter, as these differences make clear. The price index for food rose 4.7 percent over the past 12 months, a rate not seen since 1990. Through January, the PCE energy component was up roughly 23 percent over 12 months.

While some of the movement in core consumer price inflation represents pass-through of high energy pricesto transportation services, for examplewe have also seen commodity derivative trading pickups in other components, such as recreation, education and personal care services, and upticks in components, such as apparel, that have historically exerted downward pressure on the price of the consumers basket of goods.

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commodity index trading