It as good as the +1% consensus. Only much better.

Utilization capacity continues to hum at a pace re-emphasizing the inflation threat the Fed has to handle amid what are increasingly political calls to ease the plight of over-lenders and over-borrowers. Then again self-interest is what makes the system so dominant.

Equity markets have made a small initial jump on the news; but perhaps the odds-making on the two Fed funds cuts over 60% of polled economists expect by year end has been complicated a shade: Mr Bernanke's goal is to prevent a lack of credit liquidity in the interbank market getting out of hand whilst keeping a grip on inflationary pressure - he is not in the business of saving from insolvency those who got greedy.

Or at least that is what his published utterances appears to say.

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3 comments

  1. Will Rahal // 8/24/2007 09:30:00 PM

    If you express the Core Capital equipment Goods(Non-Defense Capital Goods ex airccraft) as percentage of Durable Goods, you get a sense that Busisness Invesments is relatively uninspiring. The Defense Sector of the economy has been the winner this decade.

  2. Charles Butler // 8/25/2007 01:14:00 PM

    Hi Rawdon,

    It would be interesting to know exactly how the Fed works with this terribly non-representative (at least to the extent that it is sampled too frequently) data set. For example, how would last Sep's and Oct's figures have turned out if they were, say, compiled mid-month instead? Or, what is the value of your $2 stock that is currently 1.75/2.25?

    Month %Change
    Jul 5,9%
    Jun 1,9%
    May -2,4%
    Apr 1,0%
    Mar 5,1%
    Feb 1,6%
    Jan -8,8%
    Dec 3,5%
    Nov 2,2%
    Oct -8,1%
    Sep 8,7%
    Aug 0,0%
    Average 0,9%

    Although the generally up-ish recent aspect is undeniable.

    Regards,

    CB

  3. RJH Adams // 8/25/2007 02:19:00 PM

    Charles,

    Right. And that the data is pre-Aug subprime mania. Has a month changed the way it ought to be interpreted too?

    But also alot of the devil is in the component detail, as Will points out.

    R

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