PPI Cools to +0.2%; Omicron Hitting Jobless Claims

Thursday, January 13, 2022

This morning, a December read for the Producer Price Index (PPI) is out, with the month-over-month headline number coming in half of expectations at +0.2%. This follows an unrevised hot November read of +0.8%, and much cooler than the January ’21 headline figure, which was +1.2%. Pre-market futures notched up immediately on the news.

Stripping out volatile food & energy costs (the “core” read) brings us to +0.5%, in-line with the November read. This suggests that overall inflation runs hotter than near-term food and fuel producer prices, which matches expectations. Ex-food, energy and trade comes in at +0.4%, 10 basis points lower than anticipated. High marks for this cycle in core came from April of last year — +1.1% — and ex-food, energy and trade was +1.0% in January of ’21.

Year over year, we’re still seeing frighteningly high PPI accumulation: +9.7%, a new record high (going back to 2010, when these figures were recalibrated). In fact, this metric has been hitting new highs each month going back to March of last year. The core read year over year is also a new record high: +8.3%. These have continually set new highs going back to April of ’21. For ex-food, energy and trade, today’s +6.9% in in-line with November’s print.

Initial Jobless Claims leaped up from the previous week’s unrevised 207K to 230K last week. This is the highest we’ve seen since the second week in November, and while seasonally we expect jobless claims to drop prior to the holiday shopping season and buoy back up afterward, this more drastic spike may have more to do with the Omicron variant making its way through the workforce. This would be the first economic read to reflect this headwind.

Continuing Claims, however — which are reported from two weeks ago, not last week like Initial Claims — have set a new post-pandemic low to 1.559 million, below the 1.75 million reported for the week prior. We’ve noticed for weeks that jobless claims look to be setting pace among economic metrics in getting — and staying — at pre-pandemic levels. Continuing jobless claims for two weeks ago, while not likely accounting for Omicron, appears to be bringing us back to a sense of normalcy.

Pre-market indexes look happy with these results: whereas the Dow was +63 points ahead of the new economic prints, it’s +100 at this hour; the Nasdaq was +13 points and is now +30; and the S&P 500, near flatlined at +3 points ahead of the headline reports, is +10 currently. Fed Governor Lael Brainard looks to be confirmed today as Vice Chair of the Federal Reserve, following Jay Powell’s confirmation yesterday. No other econ data is expected until tomorrow’s Retail Sales report.

Questions or comments about this article and/or its author? Click here>>

Bitcoin, Like the Internet Itself, Could Change Everything

Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix (NASDAQ:NFLX) did to Blockbuster and Amazon (NASDAQ:AMZN) did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.

Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.