When “Bad News” Becomes “Good News”

While Tuesday’s Producer Price Index (PPI) for April came in hotter than expected (+0.5%), markets took the bad data in stride, perhaps because the year/year change on the headline index was still only 2.2% (2.4% for the “core,” i.e., ex-food and energy). Another reason for the lack of market volatility from the release may have […]

Fed’s Dilemma – Hotter Inflation & a Cooling Economy + Why Inflation is so Hateful

Inflation was the main concern of markets this week. On Tuesday (March 12th) Consumer Prices (CPI) came in slightly hot, but within market expectations. As a result, the financial markets took the report in stride and equities rallied. The problem was Thursday’s Producer Price Index (PPI), an index that is a leading indicator of future […]

Incoming Data Looks Robust – It’s A Mirage

Incoming PPI data marked the initial volley of the oncoming “siege” of inflation data. Despite reopenings, state Initial Unemployment Claims spiked as March ended.  Either the reopening lags are longer than we thought, or disincentives from overly generous benefit payments are at play. If recent history is any guide, only part (25%) of the stimulus […]