2012 March 16 | timiacono.com

The Reuters/University of Michigan consumer sentiment index dipped from 75.3 in February to 74.3 in the first of two readings for March in a sign that rising gas prices may now be having in an impact on the mood of the consumer.

Based in large part on a recently improving labor market, the current conditions component remains firm, up from 83.0 to 84.2, however, the expectations component more than offset that gain, down from 70.3 to 68.0.

Consumer Sentiment

It’s a good think that equity markets don’t have a gas tank to fill every week or they too might think about pulling back but, so far, they show little sign of doing so, though that could soon change given that inflation expectations show signs of stirring to life.

Survey respondents ratcheted up their one-year outlook on consumer prices from an increase of 3.3 percent to 4.0 percent in a delayed reaction to rising pump prices that the Energy Department said gained another 4 cents over the last week, rising to a national average of $3.83 per gallon.

Five-year inflation expectations (the measure watched more closely by Fed economists) rose just one-tenth to 3.0 percent, indicating that, like Fed Chief Ben Bernanke, most Americans see rising gas prices as being temporary, a belief that, unlike Bernanke’s, could prove to be temporary itself.

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Energy Prices Drive Consumer Prices Higher

The Labor Department reported that, paced by the surging cost of energy products, consumer prices in the U.S. jumped 0.4 percent last month and, on a year-over-year basis, inflation was unchanged at 2.9 percent.

Consumer Price Index

Gasoline prices surged 6.0 percent in February and are now up 12.0 percent from a year ago as the energy index jumped 3.2 percent, now 7.0 percent higher on a year-over-year basis. Falling natural gas prices offset rising heating oil costs as the overall household energy index fell 0.6 percent last month and is down 0.3 percent from last year at this time.

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Friday Morning Links

MUST READS
The world economy: Can it be…the recovery? – Economist
Cameron and Obama plan to force down oil prices – Telegraph
Report of SPR release denied by White House – Washington Post
IMF approves 28-bln-euro rescue funding for Greece – xinhuanet
Euro zone may up bailout fund capacity to near 700B euros – Reuters
China Adds Treasuries For First Time Since July – Bloomberg
Buy New IPad. Flip Over. Understand U.S. – Bloomberg
Why is Wall Street full of psychopaths? – The Week
Goldman’s Greed: This is News? – Barron’s
Why Joe Nelson Left Goldman Sachs – Bloomberg
Oil Prices and the Recurring Monetary Nightmare – RCM
Natural Born Drillers – Krugman, NY Times

MARKETS/INVESTING
Oil near $106 as US denies plan to release crude – AP
Gold price sags as India raises import duty – Reuters
How Long Will this Market Rally Last? – CNBC
It’s not your father’s Nasdaq 3,000 – MSN Money
Is the bond bubble finally bursting? – CNN/Money
Market Keeps Rising, but Who’s Doing All the Buying? – Net Net
The end of the gold bull is on the horizon – MarketWatch
Gold Bulls Weakest in Two Months as Economy Gains – Businessweek
Is JPM Metals “Whistleblower” Letter A Fraud Or A Mockery? – Zero Hedge
Gold likely to consolidate as markets look on the bright side – Mineweb
India gold demand may weaken as customs duty doubled – Commodity Online

ECONOMY/WORLD/HOUSING/BANKING
Inflation that the CPI won’t show – Bloomberg
The American economy: Unmired at last – Economist
Gas prices spike, American motorists angered – Washington Post
China Central Bank Lowers Repurchase Rate – Caixin Online
We simply can’t afford to pay for our old age – Telegraph
Chinese Companies Forced to Falsify Data, Government Says – Bloomberg
Some states saw spike in foreclosures in February – Associated Press
House prices: first-time buyers ‘sleepwalking’ into property problems – Telegraph
Lacker Says Fed May Need to Raise Interest Rates in 2013 – Businessweek
Why Fed’s Easy Money Policy Is ‘Straining Credulity’ – CNBC
Why Quantitative Easing Is the Only Game in Town – Financial Times
The High Cost of Low Interest Rates – Fiscal Times

 
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