A big jump in Producer Price Index will make Fed focus on inflation and overlook the stagnation
Marla Guthrie
Dec. 17, 2006

The Producer Price Index is expected to jump 0.7% - a big gain against the fall of 1.6% last week. The higher inflation data will make Fed inflation haws weary. They are again focused on the inflation not the stagnation and underemployment.

The PPI Ex-food & energy will jump 0.3% against a fall of 0.9% in the last data. That is also inflationary with respect to Fed goals. The retail sales gains, consumer spending, PPI all point to higher perception of inflation. In reality it part of stagflation that is being turned into deflation slowly but steadily.

Fed is gearing for some more rates hikes. If the employment data stays the same or improves Fed will raise rates. It will decidedly bullish for dollar while bearish for stocks and gold. The higher rates will eventually turn stagflation into deflation driven recession. The Europe and Asia will be far worse hit than America.

A big jump in Producer Price Index will make Fed focus on inflation and overlook the stagnation
Marla Guthrie
The Producer Price Index is expected to jump 0.7% - a big gain against the fall of 1.6% last week. The higher inflation data will make Fed inflation haws weary.
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