What Rate Hike: Annual PPI Drops Most On Record Even As Gas Prices Rise In October

Tyler Durden's picture

Just in case the latest retail sales miss (where every major spending category missed across the board) wasn't bad enough, moments ago the BLS also reported the October PPI, which also was a disaster if only for the Fed, with the headline print sliding even deeper into deflation at -1.6%, down from -1.1% in September, and missing expectations of -1.2%. 

 

PPI's excluding the volatile series also missed sharply:

  • PPI Ex food and energy up barely 0.1%, Exp. 0.5%, down from 0.8%
  • PPI Ex food, energy and trade up 0.4%, Exp. 0.5%, last 0.5%

But the real pain emerged on a year over year basis, where the headline drop was the worst decline in history!

 

Surprisingly this time it wasn't energy's fault, where prices were unchanged at 0.0% in the month, while gasoline prices actually rose 3.8 percent.

This time wholesale deflation was prevalent in most service other categories including apparel, jewelry, footwear, and accessories retailing; loan services; portfolio management; wireless telecommunication services; and health, beauty, and optical goods retailing also declined.

There was a modest rebound in prices for truck transportation of freight which rose 0.3 percent. The indexes for food retailing and deposit services (partial) also increased.

Among goods, over one-third of the October decline in the final demand goods index is attributable to prices for light motor trucks, which fell 1.8 percent. The indexes for chicken eggs, iron and steel scrap, beef and veal, boxed meat, and electric power also moved lower. The indexes for pharmaceutical preparations and corn also advanced.

furnishings, paper, plastics, health, beauty and major household appliances.

Worst of all, the index for final demand less foods, energy, and trade services edged down 0.1 percent in October

In other words, the Fed can no longer blame "transitory" energy prices for deflation.

And now, check to you Mr. Chairmanwoman and your December rate hike.

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NoDebt's picture

"Get to da choppa!"

Looney's picture

The Fed should stop using their retarded Fed-speak and switch to Baby-talk instead.

Here’s what the rate-hiking FOMC “decision” should look like:

Mama dada

Bama saka kaka

Poo-poo

Looney  ;-)

NoDebt's picture

With the December rate increase Janet will cement her place in history as being the Fed chair that repeated 1937 all over again in the modern age.

When you are in a liquidity trap you PRINT YOUR ASS OFF AND NEVER STOP.  The instant you stop everything starts sliding backwards.

 

buzzsaw99's picture

this is not some ordinary run of the mill liquidity trap. this mofo is BIG.

Took Red Pill's picture

HA! "Mr. Chairmanwoman" I don't think that's a typo!

Dr. Engali's picture

Yeah it was, Tyler reallly meant to type "Mr. Chairthing". 

new game's picture

and reality said! "gotcha bitch"...

HopefulCynical's picture

And now, the Fed is confused.

Tyler says this like it's something new...

NoDebt's picture

They all start all small and cuddly.  Then they grow up.  Even King Kong was a baby once.

lunaticfringe's picture

The bernank got out while the getting was good. Fuck him and his "thesis experiment"

Give up. Reality is not scientific nor even mathematical.'s picture
Give up. Reality is not scientific nor even mathematical. (not verified) NoDebt Nov 13, 2015 10:55 AM

"PRINT YOUR ASS OFF AND NEVER STOP"  Huh?

The printing is what has caused the tawdry bloating of the deflation problem.  Raise interest rates to a free market level and you reward the frugal and the entrepreneurial small business owners.  This is the bedrock of a free market economy.  Small businesses don't need more credit.  Small business owners need a market interest rate on their deposits.

And savers as consumers have been entirely removed from the economy for seven years.  Time for a change?

Printing rewards the scoundrels in society, not the productive.  Print, as they have been printing, and you reward the welfare cheats, and the conniving financial dufuses who are buying over-priced homes with 3% down and defaulting right out of the mortgage-payment gate.  Print and you reward the greedy risk-ignoring bankers and the swindlers on Wall Street.

The bell tolls for thee.

Baa baa's picture

Ya got my coffee on that one.

XAU XAG's picture

How to confuse a Fed official

 

Put 2 shovels against a wall

 

Ask official to take his pick

 

Or 

 

Put fed official in a barrel

 

Ask them to piss in the corner

new game's picture

jimmy hoffa pissed in a barrel, opps, sorry wrong thread.

FireBrander's picture

The FED will "act" in a manner that is approved by their peers; they are academics first, bankers second and politicians third.

It starts with "private" grumblings from a small, non influential group, then it spreads to a larger group, then the "most respected" begin to grumble, then the grumbling goes public...at that point, the pressure is too great and the FED "acts" to show the public it's "in control" and to win the approval of it's peers.

Even if the move is disastrous, they "did the right thing" but "unforeseeable events" crushed their perfect plan.

 

aliki's picture

i once thought a rate hike would result in a 30-handle for oil.

clearly, i am wrong on this theory.

it would result in a 20-handle.

papaswamp's picture

Time for a massive storage or refinery fire/explosion. Can blame the terrorists.

NoDebt's picture

Indeed,  Not only by their policies but by their own stupid decision to keep opening their yaps and explaining everything.  Now they're not just in a policy box they're going to lose whatever shred of believablility they have left on the jawboning side.

The Fed has rendered itself irrelevant.

11b40's picture

Well, not really irrelevant, but I understand the main point.  They may have painted themselves into a corner, but whatever actions they take most certainly will be relevant.

herkomilchen's picture

Yes, a guy holding his finger on the button of a printing press can never become irrelevant.  What can become irrelevant are his elaborate stories.

JustObserving's picture

Gold unchanged on such weak data. How many billions worth did the Fed sell in a microsecond?

onewayticket2's picture

remember early 2015 stories about INVENTORY build up being a driver of gdp?  stands to reason prices are falling (starting 1Q15) with all that supply 

herkomilchen's picture

Someone sure seemed to come in and slap that 8:30 spike right back down below resistance.

SheepDog-One's picture

I'm a bit confused by the last sentence and penis softening last picture.....did ol yeller actually state a Dec rate hike? Or is that just the Vegas odds maker stuff.

buzzsaw99's picture

softening? that gave me an "innie"

big hairy nirples :vomits:

Dr. Engali's picture

I never thought I would see a bigger group of retards than those at MSNBC, until the folks running our monetary policy showed me that they can be even retardeder.

insanelysane's picture

The folks at the IRS are sad as they thought they had mostest retardest sewn up.  

Also Doc, at my kids' high school there are posters in the hallways forbidding the use of the "R" word.  The posters don't actually have the word on them just state "Don't say the R word." I had to ask my kids, what is the R word?

Dr. Engali's picture

Yeah, I don't use it around my kids, but I grew up in a different era.

FreeShitter's picture

Those eyes, only satan can love.

Spungo's picture

They'll raise rates just for the lulz. It's like those people who tell cancer patients to put coffee up their ass to cure cancer. They know it won't actually fix the cancer, but they like the thought of someone putting coffee in their ass.

unplugged's picture

HIKE YOU FED FUKKERS - HIKE !!!!   PUT AN END TO THE SHITSHOW NOW NOW NOW!!!!  BLOW THIS BITCH UP!!!

Gatos Locos's picture
Gatos Locos (not verified) Nov 13, 2015 10:11 AM

This is a bunch of BS.  The FED has created a huge misallocation of capital.  The ONLY solution is to raise rates.  Too many zombie companies are alive ONLY due to free money.  Rasing rates will trim the dead branches.

FireBrander's picture

"Rasing rates will trim the dead branches"

LOL..nope...it will KILL THE TREE!

Billions of dollars flooding into companies with no revenue and no real long term business prospects.

Walamart is on track (past/future) to buyback $51 BILLION total of it's own stock! And that's just Walmart and it's all made possible by rolling over debt at ever falling rates.

A .25 increase will be a wrench in the gears of the economy.

new game's picture

not to mention the soil is monsantoized...

herkomilchen's picture

To pick nits, the 0.25% increase itself won't be the wrench, the implications that liftoff has commenced toward 5% compared to QE4 and NIRP is the wrench.

Baby Eating Dingo22's picture

Apparently, ZH doesn't read the gnus

 

In an interview with Yahoo Finance, Secretary Lew also described the U.S. economy as “pretty positive” right now

Pool Shark's picture

 

 

He's looking at the charts upside-down...

 

Fukushima Fricassee's picture
Fukushima Fricassee (not verified) Pool Shark Nov 13, 2015 1:17 PM

Lew was looking at his ass and thought it was a hole in the ground.

insanelysane's picture

I know God wants the Fed to wait until Spring but I still think +0.25% in December and then -1.25% in January.

yogibear's picture

Lew and the Fed just look at stocks as the only indicator of how healthy the economy is.

Since stocks haven't dropped that much everything is still awesome.

FranSix's picture

I don't understand this article. Does this mean the unicorns throws up or does NOT throw up? Make some sense here!

FireBrander's picture

The FED is feeling a LOT of pressure from its peers, so the odds of raising at least .25 are better than 50/50.

If the FED doesn't raise, you know they are terrified of what even .25 would cause...that they would be willing to suffer a hit to their reputation amongst their peers rather than just raise .25 to hush the criticism, speaks volumes as to how screwed they/we are in this mess they created!

TrustbutVerify's picture

5 basis points...or even one basis point per month for a year.  

madcows's picture

Excellent.  My boxed meat  will be cheaper.

Who buys boxed meat?  Is that like Omaha steaks shipped in a cooler?  Or is that like powdered hamburg,,, just add water?

Grandad Grumps's picture

Looking at the photo of Old Yellin I have to wonder what went wrong with her.

People are supposed to be reflective in their older age. They should be looking inside for those things that the outside world cannot provide. They should not be trying to con and control the world. That is for younger folks who have something to prove.

... this rash of older sociopaths concerns me. They must be either not in control of their own actions or suffering from some latent form of psychological retardation. Older folks should be the voice of reason, knowledge and experience and not the most aggressive fraudsters in the room.