Fed losing appetite for more rate cuts As they have watched oil and food prices swirl ever higher, Federal Reserve officials have lost their appetite for more interest-rate cuts, even if the economy sinks into recession, according to the minutes of their last policy meeting released Wednesday. Surging prices for gasoline, food and other commodities forced the Fed to sharply boost its inflation outlook for this year, but not for next year. At the same time, their forecast for economic growth this year was revised much lower this year, with a rebound next year still in the cards. The minutes echoed the comments of Fed policymakers in recent days. Fed Vice Chairman Donald Kohn said Tuesday that policy was "appropriately calibrated," while San Francisco Fed President Janet Yellen had said that current policy was appropriate. Fed Gov. Kevin Warsh said Wednesday that the Fed would resist bringing out "the hammer" again.
Report: IEA set to cut oil-supply forecast The Paris-based International Energy Agency is getting ready to issue a sharp downward revision of its oil-supply forecast, according to a published report. A story in the online edition of the Wall Street Journal early Thursday reported IEA's forecast revision signals growing pessimism about whether oil companies can keep abreast of booming demand. The Journal reported the IEA is attempting to assess the condition of the world's top 400 oil fields. Its findings won't be released until November, but it is clear that future crude supplies could be far tighter than previously thought, the report notes. The IEA has predicted previously that supplies of crude and other liquid fuels will keep pace with rising demand, topping 116 million barrels a day by 2030, up from around 87 million barrels a day currently, according to the report, which added that the agency now is concerned that aging oil fields and diminished investment mean that companies could struggle to surpass 100 million barrels a day over the next two decades.
'Squawk Box' Guest Warns of $12-15-a-Gallon Gas It may be the mother of all doom and gloom gas price predictions: $12 for a gallon of gas is "inevitable."Robert Hirsch, Management Information Services Senior Energy Advisor, gave a dire warning about the potential future of gas prices on CNBC’s May 20 "Squawk Box". He told host Becky Quick there was no single thing that would solve the problem, due to the enormity of the problem. "[T]he prices that we’re paying at the pump today are, I think, going to be ‘the good old days,’ because others who watch this very closely forecast that we’re going to be hitting $12 and $15 per gallon," Hirsch said. "And then, after that, when oil – world oil production goes into decline, we’re going to talk about rationing. In other words, not only are we going to be paying high prices and have considerable economic problems, but in addition to that, we’re not going to be able to get the fuel when we want it."
Top banks call for relaxed writedown rules The world’s leading banks have stepped up pressure to relax controversial accounting rules with a new plan aimed at breaking the "downward spiral" of huge writedowns, emergency fundraisings and fire-sales of assets. The proposals on "fair value" accounting by the Institute of International Finance, an alliance of 300-plus companies chaired by Josef Ackermann, Deutsche Bank’s chairman, would enable financial companies to cushion the blow of financial crises by valuing illiquid assets using historical, rather than market, prices. Under the plan, which has been obtained by the Financial Times, banks that decided to keep assets on their balance sheet would also be freed from the requirement to hold them to maturity and would be able to sell them after two years.
More questions raised about Moody's ratings practices Moody's is investigating whether it assigned top-flight credit ratings to certain securities because of computer errors, raising new questions about the credibility of its assessments. News that Moody's might have made such mistakes emboldened the company's many critics and sent its stock price tumbling. Its shares closed down 15.9 percent Wednesday, to $36.91, their biggest one-day decline in almost a decade. The attorney general of Connecticut, Richard Blumenthal, who has criticized the practices of Moody's and other ratings firms, said that he was investigating how Moody's had dealt with the possible errors in its computer models. "One of the areas that most concerns us is the potential favoritism and abusive and illegal practices that involve dealings with the companies that they rate," Blumenthal said.
Prices soar for Memorial Day fixins' for barbecues Hamburgers and hot dogs? Check. Lighter fluid? Check. Beer? Check. More money? Americans are about to fire up their barbecues for the start of the summer cookout season, and one thing has become painfully apparent: It's going to cost a lot more than it did last year to roast a burger, or just about any other barbecue favorite, on the grill. Food inflation is the highest in almost two decades, driven by record prices for oil, gas and mounting global demand for staples such as wheat and corn, and for proteins such as chicken. And that's reaching into Americans' backyards. The price of an average barbecue -- with burgers, hot dogs, beer, soda, condiments, salad, paper plates and lighter fluid -- could run families about 6 percent more than last year.
Ford cuts truck production, profit view Ford Motor Co. said Thursday that it will cut production and expects to be about breakeven in 2009 on a pretax basis, excluding items, citing a delay in North America Automotive profitability. "Unless there is a fairly rapid turnaround in U.S. business conditions, which we are not anticipating, it now looks like it will take longer than expected to achieve our North American Automotive profitability goal," said Ford President and CEO Alan Mulally. "Overall, we expect to be about break-even companywide in 2009 -- with continued strong results in Europe and South America." In late April, Ford had handed in a surprise first-quarter profit.
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