Precious metal miners have seen, on average, a 16% drop from their April highs. Some, like the silver miners, have seen a greater correction. Right now, the GDX appears to be putting in a short-term bottom. The question stands whether this will be a lasting bottom and a step towards breaking out of the consolidation since November 2010 as miners have done over and over since 2002.
A U.S. Senate committee has been conducting a hearing on the safety of hydraulic fracturing, as it is formally known. The province of Quebec, the state of New York, and the entirety of France have recently banned the technique. And two new studies claim that fracking-derived shale gas is actually worse for the environment than mining and burning coal. With so many claims flying around about this unconventional practice, let’s get a closer look at the facts.
The two charts below offer clues for evaluating the risk of profit margin squeeze in the current economy. One is the ratio of crude to finished goods in the Producer Price Index (data through April). The other is an indicator constructed from two data series in the Philadelphia Fed's Business Outlook Survey through today's release. It is the spread between the Philly Fed's prices paid (input costs) and received (prices charged) data.
The cost of imported goods rose at an annualized rate of almost 30% during April of 2011, following a 36% (annualized) rate of inflation in March. This inflationary shock is hitting US consumers hard. Because there has been no accompanying average rise in income, this means that average standards of living are already beginning what could become a potentially rapid descent.
Last weekend it was announced that China has suspended exports of diesel fuel indefinitely to help meet domestic energy demand ahead of the peak summer season. The measure could create energy shortages and spread higher prices – and possibly panic about the availability of energy supplies - across Asia.
Higher prices are supposed to encourage more world supply. It’s standard textbook economics. But what happens when instead of export-oriented global firms, it’s governments that control supply. They may not respond to price signals the same way as profit maximizing companies. n fact, they may respond in the exact opposite way.
We are going to review inflation by looking at import prices, producer prices and consumer prices, all with data through April, 2011. We will also examine the purchasing power of the consumer dollar and the “real yield” of several items.
Dave Rosenberg discusses his outlook for the economy, the likelihood of QE3 next year, and the effects of a post-bubble credit collapse.
The American pharmaceutical system is a highly controlled apparatus for restricting access to much-needed drugs and violating the rights of those who want to purchase them. This has long been true.
Oil prices are bouncing around quite a bit these days but we think oil has a lot of long-term strength and a strong case can be made for $100 oil.