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Producer Prices Rises Most In Five Months, Service Inflation Highest In Over A Year
Following a miss in retail sales (if slight beat in core spending), the final key economic update the Fed will look at before its "first rate hike in nine years" meeting next week is today's Producer Price Inflation report which rose 0.3%, above the expected unchanged print and even higher compared to October's -0.4% decline.
The report showed that while the decline in energy prices continued as expected, sliding 0.6% in the Final Demand Goods category, there was a surprising pickup in final demand services, which rebounded by 0.5% driven by Trade which rose 1.2% from the prior month, driven by an unexpected pickup in margins for apparel, jewelry, footwear, and accessories retailing.
However, while on a monthly basis the rebound was solid and matched the PPI growth seen in June, on a year over year basis, final demand continues to trend in negative territory, where it has been throughout 2015.
Here is where the bulk of the PPI service growth came from:
Over 40 percent of the November advance in prices for final demand services is attributable to a 6.2-percent increase in margins for apparel, jewelry, footwear, and accessories retailing. The indexes for machinery and equipment wholesaling, loan services (partial), fuels and lubricants retailing, portfolio management, and long-distance motor carrying also moved higher. Conversely, prices for securities brokerage, dealing, investment advice, and related services fell 3.9 percent. The indexes for food and alcohol retailing and for water transportation of freight also fell. (See table 4.)
We wonder just where the BLS is seeing apparel inflation in an environment where every single retailer is dumping prices and slashing margins just to make up for lost pricing in volume (aka the OPEC strategy), but we are happy to wait for the upcoming revisions.
As for goods:
Half of the November decrease in the index for final demand goods is attributable to prices for gasoline, which fell 1.3 percent. The indexes for residential natural gas, electric power, carbon steel scrap, and corn also moved lower. Conversely, prices for fresh fruits and melons jumped 11.6 percent. The indexes for eggs for fresh use, jet fuel, and pharmaceutical preparations also increased.
Excluding food, energy and trade, the index inched up 0.1 percent in November. For the 12 months ended in November, prices for final demand less foods, energy, and trade services advanced 0.3 percent.
Finally, one item that caught our attention: eggs, which in the past few months have soared to unprecedented levels.
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They won't raise next week... fact... They be scared of somethin, I wonder what it is??
With all Fed credibility gone, I wonder why Yellen is still around. She might have to raise by .25% to save her own ass and the fur coat she wears. Let the ship sink already. I would suggest BTFD now.
Chinamans sez : Don't be yellen with all eggs in single basket.
They are letting the shorts accumulate before the Fed raises rates. Then they can squeeeze those shorts to a new high and say 'Viola, everything is great!' when the rates are raised and the world doesn't end right away. Strangle the market when it hits support.
I think that is exactly what they are doing. The obvious trade is short into the rate hike. But the obvious rarely happens on a positive note. If credibility is something they care about, which everyone knows is the life blood of central banks, they will save their biggest bull market manipulation move for the rate hike. They will blow out all the shorts, at least the ones with less than billion dollar pockets, and this will give move buying pressure and we make a new high. Commentators and talking heads already have their scripts for "fed was right about raising rates now, market is at all time highs" the sheep will get their first bit of info about the rate hike along with market at all time highs, and then forget about the hike. Then the market will be free to explore the August 2015 lows. Just my opinion on the manipulation techniques of the fed, so I could be wrong.
imo the FED, Greenspam, BSB never really had a clue. WS manipulates. Me thinks no rate hike, QEn, recession and high inflation ahead.
Yes. The "deflationary" period is almost at an end. Prepare for global Weimar.
you better have productive capacity, tangible assets of real value and a dependable, well-armed tribe...
The bubble is still inflated, printed money is still sloshing around bidding up prices, and employment has not fallen off a cliff so people still have some money to spend. We ain't seen nothin' like the type of price deflation of durable and discretionary goods that occurs in a major downturn.
Who gives a flying fuck about "discretionary goods". Let me guess, you believe that those dependent on SNAP can just keep growing and growing...
We are well past the point were the real producers can continue to support all the useless fucking eaters...
like it or not, this will have very real consequences (regardless of the "fiat du jour").
Sorry, allow me to clarify. Talking about "prices" in the absence of true price discovery is fucking idiotic.
'All credibility gone'.
But maybe not, and even so, just replace her and do it again.
The message she sends with this is "US economy is doing great, keep loaning us $, we are a good investment because 'safe haven' and our economy is a bit better than yours".
When the world stops loaning the US $, high inflation begins, because the Fed will have to create all fiat $ to roll over the national debt.
Threatening to hike rates is defending the dollar that makes the flow of $ into the US seem like a good decision.
clothing! Our family's year over year clothing inflation was 25%! That's more than our healthcare inflation. This isn't name brand stuff at hip mall stores. this is just normal clothing.
But, hey, no inflation.
Clothing is optional; it's like the steak dinners they took out of the index.
FED is outright incompetent. Their game of "may be raising or may be not" interest rates is not productive for general economy and financial markets. Regardless what they do, it will be perceived as something no-good.
Good Will still has a superb selection of leisure suits in many popular sizes.
So Cinderella's getting overtime polishing the prince's pumpkin?
WTF ..... No, I don't think that retail workers, et al, are ... on never mind.
The FED cannot possibly 'be competent', it is a group of wisemen in NYC making decisions that affect everyone. That can't work, never has, never will.
The FED isn't designed to work for ordinary folks, it makes the rich richer, always has, always will.
If they can't make money on volume they will scalp one customer at a time.
It's 1.5%. Keep doing the math over and over until you get 1.5%!
Retail sales slowing......prices up...are we finally reverting to Econ 101
You expect producer prices to rise during a recovery. The only folks this is a mystery to is the dumb money assembled here.
It was Me. I had to buy a new package of razor blades.
(Old Sckool double edge Platinum Feathers from Japan., Samuri sharp and last forever, sometimes 10 shaves each. Box of 100 for $25 bucks, enough to shave for the next 10 years for pennies.
Last forever ...
That's like the unbreakable golf tees sold in bags of 1000's.
The goal was stagflation, right?
MISSION ACCOMPLISHED!
To the Zero Hedgers having a hard time making ends meet: shop at Aldi. It's cheap shit and they'll accept your EBT card.
Trader Joe's in CA takes EBT
AND on the machine there's also an "EBT Cash" option. That's right. Swipe it and get cash for your EBT.
Makes sense for meth purchases.
Drugs is one of the few sectors showing any real growth. May as well encourage it.
Guns, drugs, and booze - recession-proof.