A ‘dead cat bounce’ on Wall Street?

Sarah Gardner Dec 19, 2006
HTML EMBED:
COPY

A ‘dead cat bounce’ on Wall Street?

Sarah Gardner Dec 19, 2006
HTML EMBED:
COPY

TEXT OF STORY

SCOTT JAGOW: Wall Street would love some good economic news for Christmas. A package could come today: November housing starts and wholesale prices. More now from Sarah Gardner.


SARAH GARDNER: The housing market is the weak link in the U.S. economy. In October, new home construction plunged more than 14 percent to a six-year low.

When the Commerce Department reports November numbers today we may see what Wall Street calls a “dead cat bounce.” Economist Diane Swonk:

DIANE SWONK: There could be a little bit of an upside bounce in that number but at the end of the day we’re still sort of tap dancing at the bottom of the housing market.

Swonk expects the Fed will hold interest rates steady for a while and today’s November inflation numbers should reinforce that inclination. Economist Mark Zandi agrees.

MARK ZANDI: Consumer prices were flat in the month of November and hopefully we’ll get a flat reading on the PPI just to confirm that this moderation in inflation that we’ve seen over the past few month is broad-based.

Economists predict the core Produce Price Index, which excludes volatile food and energy prices, rose just two tenths percent in November.

I’m Sarah Gardner for Marketplace.

UPDATE (5:50 a.m. PT): Red flag on inflation

U.S. producer prices soared 2 percent in November. That’s the biggest gain in more than 30 years, due partly to a spike in the cost of gasoline.

The Labor Department says core prices that exclude energy and food jumped 1.3 percent, the biggest hike since July of 1980.

That figure is likely to spike inflation concerns and speculation about how the Federal Reserve will respond.

Meanwhile, construction of new homes and apartments jumped by 6.7 percent last month, but permits to build new homes fell for the 10th month in a row.

As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.

Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.

Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.