Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!americast.com!usa-post Newsgroups: usa-today.banks From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: banks Mon, Jun 15 1992 Date: Mon, 15 Jun 92 05:41:48 EDT Message-ID: 06-15 0000 DECISIONLINE: Banking & Economy USA TODAY Update June 15, 1992 Source: USA TODAY:Gannett National Information Network MAY INFLATION LOW: Friday's report that consumer prices rose just 0.1% in May shows inflation is staying low and might even slip in the next 12 months or so, economists say. If it does fall, inflation would be following a familiar trend. After the past five recessions, inflation either fell sharply or stayed near its recession low for a year or more. (For more, see special Inflation package below.) DOW CUTS LOSS WITH GAIN FRIDAY: The stock market weathered some selling to post a modest advance Friday in response to better-than-expected news on inflation. The Dow Jones average of 30 industrials rose 2.85 points to 3354.36, cutting its loss for the week to 44.33 points. The Labor Department reported the Consumer Price Index edged up 0.1% in May, in contrast to analysts' expectations of a 0.3% gain. BUSINESS INVENTORIES UP: Business inventories rose 0.1% in April, the third straight monthly increase, the Commerce Department said Friday. Analysts say the inventory buildup indicates businesses are optimistic that consumer demand will continue to grow as the economy picks up. Inventories totaled a seasonally adjusted $816.1 billion, up from $815.7 billion in March. MORTGAGE RATES DOWN: Mortgage rates fell last week: 30-year fixed mortgage rates averaged 8.54%, vs. 8.59% a week earlier, the Federal Home Loan Mortgage Corp. says. One-year adjustable mortgages averaged 5.90%, vs. 5.94%. EAKLE IN BULLISH MOOD: Richard Eakle of Eakle Associates, a Fair Haven, N.J., investment-adviser and money-management firm with assets of $30 million, is in a bullish mood, reports USA TODAY columnist Dan Dorfman. Eakle says, "everything seems to be falling into place for a good upswing." His outlook: a 3575 Dow between July and October, vs. a Friday close of 3354.36. CONTRARY INDICATORS PRESENT: The stock market is ready for another upswing, according to Richard Eakle of Eakle Associates. Among the contrary indicators he sees as good signs, according to USA TODAY's Dan Dorfman: Mutual-fund cash reserves have risen to the highest levels since November; and sentiment, as measured by options pros is at its highest bearish reading this year. OIL PRICES FALL: Oil prices fell Friday in lackluster trading, closing with a loss for the week. Light sweet crude oil for delivery in July settled at $22.30 a barrel, down 5 cents for the day and 32 cents for the week on the Mercantile Exchange. Natural gas prices also fell. Contracts for delivery in July settling at $1.535 per 1,000 cubic feet, down 5.7 cents for the day and 11.8 cents for the week. GOLD, SILVER PRICES HIGHER: Gold and silver prices advanced worldwide Friday. On the New York Commodity Exchange, gold bullion for current delivery settled at $342.90 a troy ounce, up $2.40. Gold rose in London to $339.75 a troy ounce from $338.25. On the Comex, silver bullion for current delivery settled at $4.121 a troy ounce, up from $4.098. In London, the metal rose to $4.07 from $4.06. SPECIAL PACKAGE ON INFLATION: ECONOMISTS ENCOURAGED: Economist were encouraged by Friday's report that consumer prices rose just 0.1% in May. "Inflation looks really, really good right now," says Michael Penzer, economist at Bank of America, "and it could stay that way for the first year, maybe the first two years, of the recovery." Most economist expect inflation for the year to remain around its current 3% annual rate. REPORT SUPPORTS STATEMENTS: Friday's report that consumer prices were barely higher last month lent support to statements by Federal Reserve Board Chairman Alan Greenspan and other Fed officials that a recovering economy will not push inflation higher. Jittery bond investors have pushed up long-term interest rates this year as a hedge against the inflation they expect. LABOR COSTS STAY LOW: The major reason inflation typically is tame in the early stages of a recovery: Labor costs stay low, easing the pressure to raise prices. Last month, average hourly earnings were up just 2.5% from May 1991. That was less than the 3.3% rise between May 1990 and May 1991. Another thing keeping inflation low is stiff price competition from foreign firms. (End of package.) DOW JONES OPENS ON UPSWING: The Dow Jones average of 30 industrials opens Monday at 3354.36 after closing up 2.85 points Friday. The New York Stock Exchange composite opens at 225.51, up 0.41. The American Stock Exchange market value opens at 391.32, up 1.42. The NASDAQ OTC composite opens at 569.52, up 1.84. 24-HOUR TELEPHONE INFORMATION: USA TODAY Money Hot Line. 95 cents a minute. 1-900-555-5555. Banking & Economy Editor: Jason P. Smith. (919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution violates federal law. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM