So why was the Ticker late this morning?
The Producer Price Index for final demand increased 0.2 percent in October, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.2 percent in September and were unchanged in August. (See table A.) On an unadjusted basis, the index for final demand advanced 8.0 percent for the 12 months ended in October.
Hmmm..... the market added quite a bit -- and ex food and energy it was flat and on goods, less food and energy, was down 0.1%.
Final demand services was down 0.1%.
On the 12 month run-rate basis it was up 5.4% ex foods, energy and trade -- and up 8% gross.
Intermediate tells an interesting story; foods and feeds are down, three months running now. Unprocessed energy was down materially, which stomped on the index generally.
These are reads on a forward basis; unprocessed goods are in front of intermediate and this looks like a three month trend.
Services, however, advanced on a 12 month basis and our economy is much-more service-oriented than goods. On that basis we're still running three times the 2% "target" and, equally-importantly the last three months is accelerating higher. That's bad.
What do I expect out of this?
50 bips in December and no, we're not done -- the market's exuberance is nuts.