German CPI, Rare Earth Excitement, and Man v. Internet

There's just not a lot of market data due out today. Germany has reported its Consumer Price Index for the month of December, and the news is brutal. In November, consumer prices rose 0.1%. For December, they rose 90 bps to 1.0%. But the German economy can take comfort in the fact that the entire jump was driven by the almost irrelevant forces of home energy, motor fuel, and food. If you strip all of that out and look solely at core CPI, prices haven't changed at all![1]

The Swiss KoF Leading Indicators[2] dropped 2 bps to a 2.10%; not great news, but it still points to a reasonable amount of growth in the Swiss economy.

Everybody in the world that is not China[3] is now complaining about China's move yesterday to cut exports of rare earth minerals. The US Trade Representative's office is "very concerned" about the quota reductions. The EU is demanding that China "respect its recent assurance of a guarantee of rare earth supplies to Europe". On the other hand, everyone in the world that isn't China that has the ability to mine these rare earth minerals is ecstatic. Demand for these rare earths is set to increase by more than 125% in the next 5 years, so that's money in the bank for anyone that can supply them.

Speaking of money in the bank, Paul Allen[4] is suing the entire internet for patent infringement. His suit claims that Interval Research holds patents on how data is related to information being browsed, the way information is relayed to a computer screen in an unobtrusive manner, and the way web browsers are alerted to new items of interest based on the activity of other users. AOL, Apple, eBay, Facebook, Google, Netflix, Office Depot, OfficeMax, Staples, Yahoo! and YouTube are the major companies named in the suit, which asks for damages and a ban on products that use the disputed patents[5].

Apple is also getting sued, in what the law firm bringing the suit hopes will become a class action lawsuit, over privacy issues. It is alleged that Apple apps "leak" personally identifiable data, despite Apple's policy that only allows data sharing if an app requires the information to keep running. Google may also face a similar lawsuit.

The SEC is also getting involved in the internet, by looking into trading in privately-held internet companies (such as Facebook and Twitter). It appears that there are some online trading services that allow trading of unlisted Internet firms, and the SEC would like some information about how the shares are being valued, and whether or not this trading violates SEC rules[6]. So far, the probe is in the early stages.

[1] Yay?

[2] A composite of business surveys from the industrial, retail, and wholesale sectors, used to try to project GDP growth about 8 months into the future.

[3] Still not wanting to replace the US as the world's sole economic and military superpower.

[4] Co-founder of Microsoft and founder of Interval Research Corporation, a company you probably have not heard of.

[5] This would include Google's search engine, iTunes, AOL Instant Messenger, Apple's Dashboard, Google Talk, Google's Gmail Notifier, and Google's Android phone system, just to name a few things.

[6] Specifically, private companies must either have fewer than 500 shareholders or else publically disclose significant financial information.

Apple's Huge Announcement!

Yep. It's the Beatles on iTunes.

Personally, I don't know that I'd call that an announcement I'd never forget. But there you are.

Apple Will Change The World! Oh, and there's some reports due out as well.

First off, Apple Computers (www.apple.com) started promising last night that "Tomorrow is just another day. That you'll never forget." The smart people at the WSJ and Reuters are expecting an announcement that the Beatles discography will be available on iTunes - this is apparently big news (if true) because there has never been a legal way to get electronic copies of any song by the Beatles.

I can't say I'm all that impressed myself, but I've never been a huge fan of the Beatles. And, since AAPL is down $2 or so in premarket trading, I don't think the Street is all that impressed either.

But away with humdrum corporate shilling! We have metrics to review!

First out of the gate is the Producer Price Index (aka PPI), which is a measure of how much the costs to produce goods has changed. If you think of it as manufacturing inflation, you won't be far off the mark. Two different PPI measures really get looked at: overall PPI and core PPI (which looks at the change in costs while excluding the ever-volatile and obviously unimportant food and energy production costs; how much could they really matter, after all).

September saw a month-over-month PPI change of 0.4%, with "core" PPI increasing 0.1%. For October, the analysts are anticipating a 0.8% increase in PPI, with another lone 0.1% increase in the "core" PPI. Obviously, they are expecting food production costs, energy production costs, or both to spike.

At 9 AM we get Industrial Production. This is a measure of, well, how much our industries produce as an increase or decrease from the previous month. It also looks at something called the capacity utilization rate, which measures how much of the possible productivity of our industries is actually being used. September saw a 0.2% decrease in month-over-month production, and a capacity utilization rate of 74.7%. For October, the Street is looking for a 0.3% increase in production and a utilization rate of 74.9%.

And then, at 10 AM, we get Apple's official word on what their world-changing announcement is. Remember, you will never forget this day.

To-morrow, and to-morrow, and tomorrow

To-morrow, and to-morrow, and to-morrow,
Creeps in this petty pace from day to day,
To the last syllable of recorded time;
And all our yesterdays have lighted fools
The way to dusty death. Out, out, brief candle!
Life's but a walking shadow, a poor player,
That struts and frets his hour upon the stage,
And then is heard no more. It is a tale
Told by an idiot, full of sound and fury,
Signifying nothing.
--Macbeth, Act 5, scene 5, 19-28

If you haven't seen it yet, Apple is promising on their web site that "Tomorrow is just another day. That you'll never forget." It then invites you to come back tomorrow (10 AM Eastern, according to the clocks on the page) for an exciting announcement from iTunes.

And what is that announcement? I dunno. As of the time of this post, we have 13 hours and 7 minutes until the announcement is made. The individual who tipped me off to the story, a staff writer for Desktop Reviews, thinks it will be an announcement that they've got the Beatles on iTunes. That's just his personal opinion, though, with no solid evidence to back it up, but Reuters thinks it's likely as well.

Personally, I hope it's something more impressive than that. But I've never been a huge fan of the Beatles. Still, whatever it is, the market is sure to have some sort of response to it. And, given the popularity of the Beatles and the disposable cash the Boomers have to work with, that response will most likely be positive.