Business inventories increased an as-expected 0.4% in November, but the
previous month was revised downward by 0.2%, which might force some
forecasters to nudge their GDP forecasts downward for the current quarter,
although only fractionally, say by about a tenth of a percentage point.
The trend in inventory investment had been unfavorable for a number of
months, with inventories increasing faster than sales. By September, this
unfavorable mix pushed the inventory-to-sales ratio (I/S) upward to 1.30
months from a low of 1.25 months in the spring. The I/S ratio has stayed at
1.30 months since then, suggesting that businesses are beginning to get
their inventory levels under control. This is particularly true in the
automobile sector, where the I/S ratio fell to 1.33 months from 1.39 months
in October.
Although today's inventory figure might mean a somewhat weaker GDP figure
when data for the fourth quarter are released on January 31st, the slower
pace of inventory gain will be beneficial for economic growth in the current
quarter.
P.S. Will you be there when Cramer makes his next move?
Strong brands and companies with vast market exposure can help bolster your portfolio. Jim was able to lock in a 64% gain by buying Ingersoll-Rand at $13 and selling at $22.50. Action Alerts PLUS members were the first to see these moves. Were you among them? Get Free Access Today!
Tony Crescenzi Blog Consumer Pushing Fed to Sidelines 1/12/2007 9:55 AM EST Retail sales momentum is on the upswing, and this could drive bonds further downward.
Tony Crescenzi Blog Credit Markets Signaled Calm to Stocks 1/11/2007 3:03 PM EST The bond market's refusal to go along with a skittish equities market was an important signal.
Tony Crescenzi Blog Why TIPS Sold Poorly 1/11/2007 2:03 PM EST The recent decline in energy prices contributed to a lackluster securities auction.
Tony Crescenzi is the chief bond market strategist at Miller Tabak + Co., LLC, and advises many of the nation's top institutional investors on issues related to the bond market, the economy and other macro-related issues. At the request of the Federal Reserve, Crescenzi is a regular participant in the board's Livingston Survey of economic forecasters. He is also the author of The Strategic Bond Investor. At the time of publication, Crescenzi or Miller Tabak had no positions in the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Crescenzi also is the founder of Bondtalk.com, a popular Web site covering the bond market and the economy. Crescenzi appreciates your feedback; click here to send him an email.
TheStreet.com has a revenue-sharing relationship with Trader's Library under which it receives a portion of the revenue from purchases by customers directed there from TheStreet.com.
RSS FEEDS
PODCASTS
