2006-09-07Today's Thought of the Day is about pricing power...

2006-09-07Today's Thought of the Day is about pricing power and credit standards from Kevin Depew at Minyanville. Open the September Beige Book to follow along. From Kevin:Pricing Power: 'Manufacturers found little ability to pass through higher costs into the prices of manufactured goods.' The report noted that the exception was energy-intensive goods and services in the San Francisco district. But the bottom line is a continued inability to pass through higher costs from manufacturers. Credit Standards: 'Credit standards were reported to be steady to slightly tighter,' the report noted. 'Overall credit quality was generally described as good, and delinquency rates were little changed in most Districts, though a few noted scattered increases.'It's early. But this is how a credit bubble unwinds: Pricing power evaporate, credit standards begin to tighten, delinquencies rise and Bob's your uncle, what appeared to be inflationary (rising energy and raw materials costs) becomes deflationary as the ability to consume comes under pressure forcing an adjustment in the prioritization of expenditures. Speaking of a lack of pricing power, shares of Tomkins Plc, the world's biggest maker of car wiper blades and timing belts, fell the most in 14 years after the company said profit will miss targets on slumping U. S. demand for its auto parts and home fittings, according to Bloomberg.