"The 1.4 percent decrease, the biggest since October 2006, followed a 0.6 percent increase in July, the Labor Department said today in Washington. So-called core prices, which exclude fuel and food costs, rose 0.2 percent after a 0.1 percent gain the month before."
The reason that I posted this information is to inform you that the market will do anything to justify a rate cut by the Fed. The whole emphasis in today's financial press is on the decline of wholesale prices, which in effect is saying that inflation at the wholesale level is in check. Therefore, the Fed can go ahead and cut interest rates. However, what is completely ignored is the fact that just a month ago the emphasis by the financial media was on "core inflation." And, if you noticed the last sentence in the first paragraph, you read that core inflation rose .2%, which on an annual basis is 2.4%. This was double from the previous month. The Fed generally would like the core inflation to be between 1% and 2%.
Will the Fed cut the Fed Funds rate? You bet! Will the equity markets be satisfied? Probably not. That is why the old Wall Street adage will probably be true, which is "Buy the rumor and sell the news."
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