| ZenGum |
12-06-2007 11:01 PM |
Quote:
Originally Posted by xoxoxoBruce
(Post 414040)
I don't think so. Retailers were ordering more stock to hedge against further price increases. They can't make money stockpiling more than they think they will sell unless the price keeps climbing. So if they think it will keep going up, they buy to their storage capacity, betting the increased value of their holdings will make more, than the money would make invested elsewhere.
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A plausible interpretation, I acknowledge, but
a. I think my interpretation is more plausible, and,
b. even if your interpretation is correct, I still don't see how it is good news.
a. The sentence we're fussing over is
Quote:
However, much of the strength came from a big jump in the cost of petroleum and other energy prices, which pumped up orders at oil refineries and chemical plants.
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If your account is right, this should read something like "... much of the strength came from anticipation of increases in petroleum prices, which led to retailers building up their inventories". I think what is written supports my take more than yours.
Mind you, we're now getting into fine interpretations of a single sentence and I wouldn't mind guessing that you and I have now spent more time thinking about it than the original writer. :) It's probably not so carefully written as to strongly support the arguments I'm putting here.
b. Is it good news? Your interpretation is that this strength is caused by retailers bringing forward their orders to defend against probable future price increases. If so - then their future orders will be correspondingly lower. There aren't actually more factory orders - over, say, the whole year. They're just concentrated in October.
One thing that we are agreed upon is that the price of oil has surged and will probably go higher still. It's hard to see how that could ever be good news for anyone except oil producers. |
