PPI Comes in Red Hot at +3.5% Annualized; Wall Street Says "Buy All the Things"' Because Inflation in Clown World

Yesterday, the BLS released January CPI, which showed an increase of 0.5% and a year-over-year increase of three percent. Simply put, if CPI continues to rise at 0.5% monthly, the annual increase will not be three percent at the end of 2025, but six percent, yet the Federal Reserve insists that it finished its work on taming inflation well over a year ago and actually cut interest rates by a full percent from September through December of last year.

If it wasn't so horrible, the Fed's political miscalculation to try to keep one Donald J. Trump out of the white House by lowering the federal funds target rate by half a percent in September (just in time for the election of Kamala the Hutt), it would be laughable. Given that prices are rising instead of falling, nobody's laughing and nobody is listening to a word the Fed has to say, for a multitude of good reasons: they're wrong, they work in the interest of their shareholders (major commercial banks) instead of the American public, they have destroyed the value of the U.S. currency by 98% since inception in 1913, and, they're about to be extinguished by the man they tried so hard to defeat. Trump is hell-bent on restoring constitutional money to the United States. There is no need for the Federal Reserve (a private bank) if the Treasury issues US$.

What occurred yesterday on the major exchanges was familiar. Wall Street rejected the assumption that consumer prices actually matter, and, after futures collapsed on the CPI reading, when the cash market opened an hour later at what turned out to be the lows of the day on the Dow, NASDAQ, and S&P 500, the reaction was adverse, buying the dip, as if nothing mattered other than higher stock prices. The NASDAQ, particularly the most egregious performer of stock market magic, was down more than 220 points at the open yet finished the session with a gain of six points. Woo-hoo!

The Dow and S&P ended with losses, but they were both well above the opening lows.

So, were all those selling in the futures market just plain wrong, stupid, ignorant of the reality that stocks must go up all the time, or, are markets just wired to reflect the never-ending con game to buy anything the Wall Street horde is pushing? AI? Dotcom? Crypto? Bio-tech?

Maybe its something different. Maybe stocks will continue to rise because of inflation. In Weimar Germany and in Zimbabwe, during their bouts of hyperinflation, stocks soared. However, the reality of the situation exposed the lie: 200, 300, 500% gains in the stock market didn't stand a candle to inflation running at 600, 800, or more than 1000 percent. The price of their investments may have looked fine on paper, but their value was being decimated, and high stock prices today may be just a symptom of the underlying inflation disease.

Today, the BLS is treating the financial community to their estimate of Producer Price Inflation (PPI), which has been a mixed bag the past six months, but has inched higher the past two.

Here is the BLS headline statement:

The Producer Price Index for final demand increased 0.4 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.5 percent in December 2024 and 0.2 percent in November. (See table A.) On an unadjusted basis, the index for final demand moved up 3.5 percent for the 12 months ended January 2025.

Leading the broad-based January advance in the index for final demand, prices for final demand services rose 0.3 percent. The index for final demand goods moved up 0.6 percent.

The index for final demand less foods, energy, and trade services rose 0.3 percent in January after moving up 0.4 percent in December. For the 12 months ended in January, prices for final demand less foods, energy, and trade services advanced 3.4 percent.

So, the unadjusted 3.5% annual inflation at the producer wellhead and 3.4% annual core producer inflation is good, no? NO. It's not good. Producer prices largely get passed onto consumers, so expect the CPI to continue going higher while the genii at the Fed do nothing.

Drilling down a bit to the BLS charts, PPI change in final demand from 12 months ago (unadjusted) looks like this:

August: +2.1%; September: +2.1%; October: +2.7%; November: +2.9%; December: +3.5%; January: +3.5%.

Now, all you math majors: is +3.5% inflation better than +2.1% inflation? Anybody notice a pattern developing?

These figures are all higher than what was expected, yet, upon the release, stock futures jumped higher, because, well, if the currency buys less, then stocks must be priced higher.

Makes perfect sense, in Clown World. (OK, OK, wait. Stock futures were down hard yesterday and stocks rallied, so today, futures are up, so stocks will fall? Mmmm, maybe not, since logic is not allowed in Clown World.)

At the Close, Thursday, February 13, 2025:
Dow: 44,368.56, -225.09 (-0.50%)
NASDAQ: 19,649.95, +6.10 (+0.03%)
S&P 500: 6,051.97, -16.53 (-0.27%)
NYSE Composite: 20,062.31, -105.89 (-0.53%)