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Five Things You Need to Know: The Three Tenses of Inflation Conjugation; also MinyanBet!

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What you need to know (and what it means)!

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Minyanville's Five Things You Need to Know to stay ahead of the pack on Wall Street:

Conjugation is the creation of different forms of a verb from its principal part. As it turns out, the word "Inflation" is not actually a verb, which means I apparently did not think this exercise through very well. But none of that matters now because below Minyanville presents the three tenses of "Inflation."

1. Just plain, run-of-the-mill inflation.

Today the Producer Price Index came in with the headline number above expectations, indicating just your plain, old, every day run-of-the-mill inflationary pressures in the United States.

  • The Producer Price Index rose to 0.5% in June following May's increase of 0.2%, and above expectations of 0.3%.
  • The PPI, excluding Food and Energy came in at 0.2%, however, matching expectations.
  • Still, year-on-year the PPI is running at 4.9%.
  • Also, the gain in core prices over the last 12 months was the biggest since September 2005.
  • Food prices jumped 1.4 percent, the most since October 2004.
  • Federal Reserve Chairman Ben Bernanke will testify before the Senate Finance Committee in the Fed chair's annual Humphrey-Hawkins testimony beginning tomorrow.
  • There has been some speculation that given current geopolitical turmoil and some evidence of slowing growth in the U.S. that Bernanke would use the H-H opportunity to adopt a more dovish tone.
  • The headline PPI makes that a bit more difficult now, however, unless a CPI surprise (lower-than-expected) appears in tomorrow's data.
  • The consumer price index expectations according to a Bloomberg survey are for an increase of 0.2 percent.

2. Things suddenly getting a little Inflationer, if you know what I mean.

The UK Office of National Statistics reported today that its broad Consumer Price Index rose to 2.5 per cent in June, suggesting things are getting a little inflation-er over there across the pond, if you know what I mean.

  • Consumer prices in the UK rose 2.5 percent from June 2005, exceeding the median Bloomberg economist forecast of 2.3 percent, Bloomberg reported.
  • Increases in housing, water, electricity, gas and other fuels drove U.K. inflation higher in June, the statistics office said, according to Bloomberg.
  • That's the highest level for CPI since last September.
  • More importantly, the inflation rate has exceeded the Bank of England's 2 percent target for two months now.
  • This means the Bank of England may have no choice but to raise rates in August to try and cool inflationary pressures there.
  • Still, the CPI rise there remains largely attributable to energy. Similar to the US, the core rate is only about 1.2%, though that is up from May's 1.1% level.

3. Holy Mother of Freaking Inflation! Inflation so high that people are using wheelbarrows for wallets.

Imagine reaching into your wheelbarrow wallet to pay for that sandwich. "How much is it?," you ask the clerk. "$14,025 dollars," he replies. "No, wait," he says. "$14,048 dollars. Sorry, $14,109 dollars. Dang! This thing just keeps going up! Now it's $14,143 dollars! Hurry up, gimme $15,000 before it gets there!" Holy Mother of Freaking Inflation!? Welcome to Zimbabwe.

  • Consumer inflation data released on July 10 by Zimbabwe's Central Statistical Office showed a slight easing in the rate at which prices of essential goods and services rose over the 12 months through June.
  • Sweet, inflation is easing slightly in Zimbabwe, you are thinking to yourself.
  • So, what has the June rate of inflation in Zimbabwe fallen to?
  • 1,184.6%. Down slightly from May's 1,194.5%.
  • Holy Mother of Freaking Inflation!

Zimbabwe Wallet


4. China Ignores Government Restraint, Grows Anyway!

China's economy grew a whopping 11.3% in the second quarter, the most in a decade, according to Bloomberg.

  • Spending on factories and real estate in China accelerated in June, the statistics bureau said today, helping gross domestic product grow faster than the 10.4 percent median forecast among 30 economists surveyed by Bloomberg, the news service and data provider reported.
  • That's smokin'!
  • That's also bad news on the global liquidity front as the Bank of China will probably have to force even more "restraint" now, perhaps raising lending rates for the second time this year.
  • "We are concerned about the overheating situation,'' said Masahiro Kawai, head of the Asian Development Bank's office of regional economic integration, according to Bloomberg. "There is an even stronger case for a tighter monetary policy and a more accelerated pace of the yuan's appreciation.''
  • But is that really the case?
  • Year-to-date the yuan has risen a "whopping" 1.3% and China's lending rates have "jumped" 27 basis points.

5. MinyanBet

US authorities on Monday signaled the start of a crackdown on the online gaming industry, unsealing an indictment against 11 people, including the chief executive and founder of UK-listed BetonSports, and charging them with a variety of violations ranging from racketeering to conspiracy and fraud, the Financial Times reported.

  • The 22-count indictment was announced after David Carruthers, chief executive of BetonSports and a critic of US attempts to clamp down on online gaming, was arrested on Sunday in Texas on his way from London to Costa Rica, where the company is based, the FT said.
  • Catherine Hanaway, US attorney in St Louis, said, "This indictment is but one step in a series of actions designed to punish and seize the profits of individuals who disregard federal and state laws."
  • Last week the House of Representatives approved legislation to crack down on Internet gambling operations, including criminalizing the processing of payments to such operations by financial institutions. The Senate has yet to vote on the bill.
  • Meanwhile, Mr. Carruthers has lobbied vigorously against such a move, calling for sector regulation instead.
  • Shares in BetonSports fell 16.7 percent, while SportingBet, another UK company with significant US market exposure, fell 13 percent.
  • Prosecutors assert that under the Federal Wire Act of 1961, the providers and promoters of Internet sports books and casinos are participants in a criminal enterprise.
  • Minyanville is very concerned about online gambling.
  • In fact, we are so concerned that we have below created MinyanBet, an online "voting" mechanism where you can register your "prediction" against other Minyans in this winner take all!* pool.
  • How do you think this Internet gambling crackdown will play out? Place your bets... online!


MinyanBet! Current odds:
Potential outcomes of U.S. "crackdown" on Internet gambling

* Winner take all refers to final pool amount less MinyanBet fees of 14.9% for "vote handling."

No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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