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Pre-Market Primer: Slow Inflation and Speedy Housing Starts Come Ahead of Fed Meeting


The free trade deal with Europe could mean cheaper shoes for Americans.

Mixed data on housing and inflation greeted investors this morning as they prepare for tomorrow's all-important Fed announcement.

US housing starts rose 6.8% in May. Builders broke ground on new houses at a seasonally adjusted annualized rate of 914,000, missing estimates of 955,000. April's rate was revised up to 856,000. Building permits declined, but came in just above estimates at 974,000.

Inflation was subdued again. The consumer price index rose 0.1% month-over-month in May after falling 0.4% in April. The price of shelter was among items that rose, while fuel prices stayed flat and food costs fell. Excluding food and energy, CPI rose 0.2%

Futures are little changed before the opening bell. Dow (INDEXDJX:.DJI) futures were up 0.07% at 15,132. Futures contracts on the S&P 500 (INDEXSP:.INX) climbed 0.07% to 1,634.80 and Nasdaq (INDEXNASDAQ:.IXIC) futures rose 0.13% to 2,968.50.

The Federal Reserve begins its two-day policy meeting today, and all focus this week will be on the minutes release and press conference tomorrow afternoon.

In an interview with Charlie Rose, President Obama hinted that Ben Bernanke's days as Fed chairman might be over soon. Obama said that Bernanke has served "a lot longer than he wanted or he was supposed to."

European shares are mixed today as car sales in the region came in weak. The Association of European Carmakers reported that sales fell 5.9% year-over-year to a 20-year low of 1.042 million in May. Sales in Cyprus tumbled 41.4%, but rose 11% in the UK. British inflation rose 2.7% yearly in May, largely helped by a steep rise in transport costs.

Germany's ZEW investor sentiment index showed that future optimism is rising. The index climbed 1.1 points to 38.5 in May, beating expectations, But current conditions are viewed less favorably, falling 0.3 points to 8.6. Economists agree that Germany won't pick up until later in the year.

Japanese stocks ended the day just slightly lower. A report today showed that industrial production in the country missed expectations, expanding 0.9% in May. Economists expected a repeat of April's 1.7% growth rate.

In corporate news, Research In Motion Ltd (NASDAQ:BBRY) shares rose 1.05% after RBC Capital markets analysts raised their estimate of BlackBerry 10 device sales to 3.5 million for the first quarter and and 4 million in the second quarter.

Adobe Systems Incorporated (NASDAQ:ADBE), the maker of Photoshop and other design software, could see heavy trading today before it reports earnings this afternoon. Analysts expect the firm to report earnings of $0.34 per share.

Netflix, Inc. (NASDAQ:NFLX) continued to rally in after-hours trading after rising 7% yesterday on news of a deal to carry content from DreamWorks Animation Skg Inc (NASDAQ:DWA).

The United States and European Union began hammering out the biggest free trade agreement in history at the G8 summit in Northern Ireland. Among the economic benefits are cheaper shoes for Americans, who pay as much as 66% in tariffs for imported shoes. Japanese and European carmakers could also benefit from unified safety regulations.

Twitter: @vincent_trivett

Disclosure: Minyanville Studios, a division of Minyanville Media, has a business relationship with BlackBerry.
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