Safe Haven | Merk Economic Calendar: Week Ahead In US Financial Markets (June 9-13 2008)

Consumer Price Index (May) Friday 8:30
After a very modest increase in both headline and core inflation in April, the market will be focused on any possible revisions to data after seasonally adjusted inspired -2.0% decline in the cost of gasoline. Our skepticism regarding the current state of the data is a matter of record and we will not delve on it further here. Over the next few months the data will begin to capture the increase in the core costs that most individuals have begun to observe and are behind our assessment that inflation will continue to rise throughout the remainder of 2008. For us, just as important is the relative increase in the cost of food that hit a record 5.1% in April and is poised to continue to increase at near record levels in May. Food represents 13.8% of the cost of living for the median consumer and the combination of the sharp increase in the cost of food and energy has begun to change the consumptive behavior of the individual. Our forecast implies that headline CPI will advance 0.5% m/m and 3.9% y/y. The core will increase 0.2% m/m and 2.3% y/y for May with the risk for the trading day to the upside.


University of Michigan Consumer Sentiment (June Preliminary)
Friday 10:00We do not expect any improvement in the very bearish condition of consumer sentiment anytime soon. For sometime we have made the case that consumer sentiment has become quite sensitive to changes in the cost of gasoline. At this point, the cost of petroleum has increased so sharply, it is stimulating a further change in behavior. According to the US Department of Transportation miles driven has fallen 4.3%. The Department of Transportation reports that demand for petroleum is down 3.9% and the Spending Pulse report on credit card spending stated that demand for retail gasoline dropped 6.0%. It is little wonder that the estimates of consumer sentiment across the board are touching decade long lows. We expect the headline to fall to 56.1 for the preliminary June estimate.

Safe Haven | Merk Economic Calendar: Week Ahead In US Financial Markets (June 9-13 2008)

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