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--Barry Asmus

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Wednesday, January 12, 2011

"When Johnny Comes Marching Home Again, Hurrah, Hurrah"

"He'll find Import and Export Prices then,
"Hurrah, Hurrah!
"Tim Geithner speaks and the Beige Book comes out
"The Treasury Budget will also come out
"And we'll all place trades as Johnny comes marching home"
That's a convoluted and musical way of letting you know what's due out today.  I'm in a mood.  What else can I say?
Import and Export Prices are, of course, an index that tracks the overall change in the cost to import products and the overall revenue received from exporting products.  If export prices rise faster than import prices, that can indicate a narrowing trade deficit.  To prime the pump, both import and export prices were up 1.5% in November.  Looking to December, the Bureau of Labor Statistics shows us that import prices rose 1.1% in December (for an overall 4.8% increase for the year) while export prices only increased 0.7% in the same month (but were up 6.5% for the year).  Drilling into some specifics:
  • Fuel import prices were up 4.1% for December, 11.9% for the year.  This is paltry compared to 2009, which saw a 62.2% price increase.  Import petroleum prices were up 13.7%, but import natural gas prices were down 11.3%.
  • Agricultural export prices were up 1.7% for December, taking advantage of those rising world food prices and further boosted by cotton prices (up 10.5%) and soybean prices (up 5.0%).  For the year agricultural export prices were up 20.2% (with cotton prices - up 107.0% - in the driver's seat)
Meanwhile, Secretary Geithner's speech is banging the drum about how China's refusal to allow the yuan to appreciate is bad[1].  "China still closely manages the level of its exchange rate and restricts the ability of capital to move in and out of the country.  These policies have the effect of keeping the Chinese currency substantially undervalued."  China[2], however, does not appear interested in being lectured on how to maintain a viable economy by the United States[3], and Geithner even noted that this is driven more by a desire to reduce the competitive advantage possessed by Chinese exporters.
The Beige Book and the Treasury Budget are due out a 2 PM.
[1] M'kay?
[2]  Which has both a trade and a budget surplus.
[3]  Which has neither a trade nor a budget surplus.

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