THE next consumer inflation number could be a killer. And that might be why Alan Greenspan seems so fixated on inflation this week.
The Consumer Price Index for the month of May will be reported by the government next Tuesday morning, and it’ll be the most important stat before Greenspan and the Federal Reserve board discuss interest rates.
The financial markets are already expecting at least a quarter-point increase in borrowing costs, but the Fed is so far behind market rates that anything is possible.
Unless someone is dealing from the bottom of the deck (more on that later), Tuesday’s CPI could be a doozy. Consumer prices rose just 0.2 percent in April. That news came after wholesale prices were reported up a disturbing 0.7 percent for the same month.
Inflation at the consumer level was kept in check because gasoline prices were reported to be up just 3.7 percent, or about 6 cents a gallon. And the price of fuel oil actually fell 1.9 percent in the last report.
The big increase didn’t occur until May, according the American Automobile Association. (The price of gas later topped $2 a gallon and has come down a tad since then, but that won’t count in the next CPI.)
AAA says the average price of a gallon of gasoline was $1.78 in the middle of April, a period that coincides with the government’s CPI survey period for that month. That was up from $1.72 during the same time in March.
But AAA said the price shot up more than 17 cents a gallon, or about 10 percent, to $1.95 from the middle of April to mid-May, the period that will be reported during the government’s June CPI figure.
That alone could add 0.3 percentage points to the CPI figure. Unless some other non-fuel product in the CPI calculation got miraculously cheaper, that rise in gasoline could put additional pressure on the Fed.
Maybe that’s why its chairman has started to sweat.
Producer prices will be released no earlier than Tuesday, with expectations for an increase of 0.5 percent, which is slightly lower than the previous month. The figure had been scheduled for release today, but the government has been having trouble compiling that data all year.
The consensus is that consumer prices will climb 0.4 percent on Tuesday, twice last month’s rise. The gas wild card could make things worse.
Washington does use something called “intervention analysis” when the cost of something like gasoline suddenly causes a jolt. And, in case you are wondering, that’s what I mean by dealing from the bottom of the deck.
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Did the attorney for Peter Bacanovic warn prosecutors about a lying FBI agent while his client’s and Martha Stewart’s trial was still going on?
Stewart and co-defendant Bacanovic will soon ask for a new trial. The odds are long that they will get it.
But I’m hearing some whispers that both their defense attorneys could start playing tough, after being on their heels since their clients’ convictions.
As you know, FBI agent Larry (no relation to Martha) Stewart was recently charged by the government with lying during the trial of Martha Stewart and Bacanovic.
Larry claimed on the witness stand to have conducted ink analysis tests that – the government later alleged – were actually done by another FBI employee.
In the government indictment, Larry Stewart is quoted as telling a colleague that the person who actually conducted the test for the FBI’s Forensic Services Division “******-up.”
Larry Stewart was said to have commented that he was “covering” for the person who tested the ink when he allegedly lied in court.
That’s all damning enough, but I hear that Bacanovic’s side may claim that it warned prosecutors while Larry Stewart was still on the stand that their witness was fibbing.
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It’s been four years since I started writing about Sumner Redstone’s stealth move on Midway Games. This week the Viacom chairman hinted that he might buy the whole company and take it private.
When my first article appeared in July 2000, Midway was selling for just under $10 a share. Today it’s slightly over $12. Sumner coulda’ done better in a money market.
For the record, when I questioned Redstone recently, he said he had no intention of getting Viacom to take his Midway stake off his hands.