What’s the Story?

by CC March 16, 2012 9:17 am • Commentary


Consumer prices rose by the most in 10 months in February as the cost of gasoline spiked, but there was little sign that underlying inflation pressures were building up.

The Labor Department said on Friday its Consumer Price Index increased 0.4 percent after advancing 0.2 percent in January. Gasoline accounted for more than 80 percent of the rise in consumer prices last month, the department said.

Outside the volatile food and energy category, inflation pressures were generally contained. Core CPI edged up 0.1 percent after gaining 0.2 percent in January.


The output of the nation’s factories, mines and utilities was flat in February, the Federal Reserve said Friday. This was well below Wall Street expectations of a 0.4% gain. February production was suppressed by a drop in mining and auto production and a flat reading for utility output. January production was revised up to a 0.4% increase from the initial estimate of unchanged. Factory activity alone rose 0.3% in February after a 1.1% increase in the previous month. Capacity utilization – a gauge of slack in the economy – inched down to 78.7% in February from 78.8% in January.


The euro zone may raise the combined lending power of its bailout funds to close to 700 billion euros from 500 billion in a trade-off between German opposition to committing more money and calming markets, euro zone officials said.

Euro zone finance ministers and central bankers will discuss the size of their bailout funds – the temporary European Financial Stability Facility (EFSF) and the permanent European Stability Mechanism (ESM) in Copenhagen on March 30-31.

The 440 billion euro EFSF and the 500 billion ESM now have a combined lending ceiling of 500 billion euros, which means that in the 12 months from July 2012 when they co-exist, they cannot lend together more than 500 billion euros.

Markets have long been pushing for a higher capacity for euro zone lending to make sure the 17-nation bloc has enough money to bail out even its large members like Italy or Spain, should that be necessary, but Germany has been adamantly opposed to such an increase.


Industrial production and capacity utilization data will be released at 9:15 am ET. Economists expect a 0.4 percent monthly rise in production and a capacity utilization reading of 78.8 percent.

And the Thomson Reuters/University of Michigan Survey of consumer sentiment will be released at 9:55 am ET. Economists expect a rise in the index to 76.0 from 75.3 in the final February report.

Meanwhile, “quadruple witching”—the simultaneous expiration of various options and futures contracts that occurs on the third Friday of the third month of each quarter—may add to volatility, according to analysts.


Stocks to Watch

Shares of New York & Co. and Scholastic Corp. are among the stocks that could see active trading on Friday.

New York & Co. , a women’s clothing and accessories retailer, posted a fourth-quarter net loss from continuing operations of $10.9 million, or 18 cents a share. Analysts polled by Thomson Reuters had expected a per-share loss of 21 cents.

Scholastic Corp.  shares rose 13% Thursday after the children’s book publisher posted better-than-expected fiscal third-quarter results, fueled by strong sales of “The Hunger Games” book series. The company also lifted its full-year earnings forecast.

ReneSola Ltd. is seen reporting a loss of 30 cents a share on revenue of $137.8 million, according to a consensus poll of analysts by FactSet Research.

China Sunergy Co. Ltd. is expected to report a fourth-quarter loss of $1.18 a share on revenue of $91 million.


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