Today's PPI Numbers

The Producer Price Index clocked a 0.1% rise in October, which was less than expectations of 0.3%. However …

There was something funky with the gasoline number. Gasoline prices fell 3.1%, which must have been a quirk of when the data was collected – that is, it must have missed the big rise that started at the end of October. I can tell you that gasoline prices are certainly rising now.

And the year-over-year rise in headline PPI was 6.1%, versus 4.4% in September. That means the annualized pace of PPI growth has hit a 2 year high! Look at this chart I’ve made of the year-over-year rise in the headline producer price index. That sure looks inflationary to me.

Producer prices ex- food and energy (the core number) looks tame, but looking at prices without food and energy doesn’t work for me. Show me someone who lives without consuming food or energy.

Still, the stock market futures are reacting very postively to this number, because traders this PPI number gives the Fed more room to cut interest rates in December.

If the Fed follows the market’s wishes (the probability of a quarter point rate cut next month is 80%), that means more downward pressure on the US dollar. And THAT should mean more upward pressure on gold and silver.

Check out my new gold and energy blog at MoneyAndMarkets.com