Retail sales is higher than expected amid higher jobless claims. However, be prepared for another drop on Friday 13th.

Could be due to higher inflation.

Inflation could actually save US from going into recession technically.

Without inflation, real growth could be negative.

This post has been edited by SKY 1809: Jun 12 2008, 11:38 PM

Hm, so are you saying that having a higher rate of inflation is better than being in a recession?

Fear factor is bad for the market. It would sink any economy.

Japan is a good example, people refused to spend more money, their economy sank for many years .

The Fear Factor is affecting Malaysia's markets.

This post has been edited by SKY 1809: Jun 12 2008, 11:47 PM

Ok, i do understand that consumer confidence and business confidence affects markets; but how does it relate to higher inflation and a recession? Both these market conditions affect investors confidence.

I would think any Central bank governors will prefer a recession than a high inflation with price instability.

This post has been edited by AdamG1981: Jun 12 2008, 11:56 PM

I thought Central Banks all over the world receive orders from their Governments. Correct me if i am wrong.

Never in any elections in US or other parts of the world , parties asking people to go into " recession ". People would be depressed.

This post has been edited by SKY 1809: Jun 13 2008, 12:07 AM

Central banks are independent; maybe some governments to have an influence in monetary policy but US central bank is independent.

Again, you are misunderstood my point. We are comparing both inflation and recession; which one would a central banker prefer?

Recession / Expansion is a cycle. Indeed no one requests to have a recession. Ben & Co had no choice but to raise interest rate because the economy is "too hot" and therefore tightening of the monetary policy is needed. Unfortunately for him, the US economy is suffering from a large trade deficit and fiscal deficit. When he lowered rates, this spurred the rush of buying oil as an hedge to fight inflation due to a weaker dollar. Hence, today we have a worldwide oil shock crisis due to the depreciation of the US dollar.

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Added on June 13, 2008, 8:27 amDow Jones was up last night as much as 170 points and closed only 50 points higher. Hmmm, does not bode well.


This post has been edited by AdamG1981: Jun 13 2008, 08:27 AM

SIME (Through Golden Hope) will publish the loss of RM120m in future Trading and 2 top gun will face dismissal (not confirmed).

Hmm, I Q for Sime at 850

It is more due to tax rebate under the US gov stimulus package. So people got extra money to spend.

Real growth aka GDP growth is measured after deducting the inflation.

Nominal growth - inflation rate = GDP growth.

So those published GDP growth is already taking account of inflation.
But having said that, inflation figure is open for debatable as we knew actual inflation rate is not as low as official rate due to the fact of method computation.

But retail sales is not, if not mistaken. So inflation can distort the sales numbers.

Central banks is independant from gov or politic. They don't receive order from gov, they made their decision based on their financial intelligent although they are appointed by the gov. They have their mandate to do which normally is to govern economy growth and controlling inflation through moeny supply. FYI ECB only has one mandate aka controlling inflation.
Fed and ECB are the 2 leading example of independant decision making.

But having said that, central banks in other countries esepcially those smaller one or less transparent one, more and less being influenced by gov policy, as we knew world is not perfect.

This post has been edited by cherroy: Jun 13 2008, 09:07 AM

There are many things on papers look or said to to be independence, but it is the action that counts.

There are many times Fed said ( early this year ) that US was doing fine. Then, they rushed to cut rate before the usual scheduled dates.

That goes to show they are lacking the independence.

Many times, they have planned the rescue packages before the big boys were to announce massive write offs.
They are on pressure on many issues that could influence their ultimate decisions.

On papers, I do agree they are very independence. No arguments over this.

The big boys announced massive write offs was because of aggressive investment management in very risky asset classes. Ben & Co had to rescue Bear Sterns (amid controversies) because it will rattle the entire financial industry and caused greater harm overall if they did nothing.

I do agree the Feds are confused now; fighting inflation or rescuing the financial sector. But bear in mind, the US Federal reserve has always been independent regardless if there's a republican congress/president or vice versa.

I do agree they are more independence than other parts of the world, but not totally independence.


For many decades, they could not address the trade/current acc deficits issues deemed to be their areas of " controls "

For this part of the job, our Malaysia Central Bank is doing a much better job, though less independence than US.

This post has been edited by SKY 1809: Jun 13 2008, 09:53 AM

Both trade and fiscal deficit was caused by Bush disastrous tenure as President. WAR in IRAQ/Afghan took billions of dollars from the Taxpayers. Not only that, American consumers were high on Chinese made product because it was so cheap. Indeed the Americans brought this to themselves. The FED could not avoid this since trade and foreign affairs policy were handled by the White House.

So i don't see why the Fed should take the blame for Bush's cowboy antics.

Trade deficits and current accounts are root causes of all US financial problems.

If FED and CENTRAL BANK are not given the authorities to address the issue.

How on earth can they said to be independence ? They are supposed to manage the economy on behalf of US citizens , and not BUSH right ?

The FED only governs monetary policy, setting interest rate, performing open market transactions (purchasing,selling us dollars) or in layman terms currency intervention.

The US government or US Congress determines FISCAL policy, and BUSH can VETO if he WANTS.

During Clinton's presidency tenure, US had a BUDGET SURPLUS, but since Bush took over, we been in a budget deficit for years. WAR was approved by Congress? The first ever stimulus was signed by Bush and approved in Congress.

Congress could have impose higher tariffs on Chinese goods, but they didnt, allowing for cheaper chinese goods to come in and taking away jobs.


US Congress = Fiscal policy

Federal Reserve= Monetary policy

They did not bring this to themselves. WAR in IRAQ/Afghanistan is A MUST. I TOTALLY SUPPORT in getting rid of terrorism.

Even now, i lose 60k in share market, i still think this WAR should go on!!!

In fact, I would prefer that US goes to war with IRAN and PAKISTAN. Even if it mean losing 80% of my share!! i will still support them.

This world has a disease right now and people in IRAN/PAKISTAN/AFGANISTAN/SYRIA/LEBANON should not be left to spread this disease

picking up some TA today, planning to get its dividen soon.

currently TA people is dumping from the chart i see.
Air Asia too from the chart.

but personally I think, you can't use darkness to fight darkness to get brightness....