wtf! *bad* inflation report JUST out [ppi]

all right producer price inflation

numbers due out in the next 15 seconds

let's cover what to expect keep in mind

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hack linked down below PPI final demand

is expected to be 0.2 4.2 and what do we

get all right headline number actually

comes in a little hot 0.3 not so great

for that disinflation narrative uh ppix

food and energy that's your PPI core

comes in at 0.3 that's 0.1 hot we got a

little bit of a hot read here on PPI not

great probably gonna help push push

stocks down lower here we just got ppix

food and energy and X trade at point two

that matches the point of two that we

were expecting year over year though

comes in a little hot year over year

expected to be 2.3 comes in at 2-4 year

over year X food energy trade uh

expected to come in at 2.5 comes in at

2.7 we also have revisions that come in

higher PPI final demand year over year

uh coming in at uh the prior was revised

to 0.2 versus 0.1 so a slightly upper

vision and then PPI X food energy trade

year over year coming in at 2.7 versus

the prior of 2-6 pretty much everything

just got ticked up not great the only

thing that actually got oh my gosh these

numbers are all what the hell these

numbers are all over the place okay PPI

final demand month over month gets

revised last month from point one

to zero so it gets revised down and then

get this PPI X food and energy month

over month goes from point one to

negative point one so this is kind of

like

bad news last month good news the month

before but it's a month late weird PPI

report here I don't know that and we'll

look at the actual report here in just a

moment we're definitely seeing uh you

know some of the what we would expect a

minor red candle popping up right away

on a NASDAQ obviously it'll take some

time to see how this actually ends up

playing out those prior revisions to the

downside may be setting the basis for

these higher results for this uh PPI but

producer price inflation is usually a

tool that leads to Consumer Price uh

inflation reads and so we like to see

PPI come in low uh unfortunately in this

case it looks like we beat some of the

estimates just by about a tenth of a

percent as well as having some revisions

to the upside but also some revisions to

the outside so a little all over the

place let's see if we can actually go

into the report

and see what the contributors here were

for a slightly higher PPI report this

isn't great though this is uh once again

going to uh reiterate what your Mary

daily suggested from the FED which is we

still have work to do on inflation it is

entirely likely that the Federal Reserve

in fact I would call it probable that

the Federal Reserve new PPI numbers were

going to come in a little warm and

that's why they ended up a little calm

after those CPI numbers yesterday and

they refused to be excited about the CPI

numbers yesterday that would make sense

the FED does have the ability to get

some of these reports sometimes a day

sometimes even a weekend before we as

the public get these releases

creates probably a good opportunity for

them to trade

obviously they say they don't but so

shouldn't be so jaded Kevin here but

let's look at the actual PPI report

producer price index for final demand

increased 0.3 percent seasonally

adjusted in July let's see what

contributed here uh this was uh this was

driven by a 0.5 rise in the index for

final demand Services Services that's

that that sticky area where people are a

little nervous potentially about oh no

uh you know is is that going to continue

to contribute

uh to uh uh inflation sticking around

for much longer

uh let's see final demand a point five

percent of the largest increase since

August of 2022 leading the broad-based

advance in July prices for final demand

Services less trade transportation and

warehousing climb 2.3 and final demand

Services margins Rose 0.7 percent

product detail 40 of the July advance in

the index for final demand Services can

be wow uh traced to a 7.6 rise in prices

for portfolio management indices for

machinery and vehicle wholesaling

Outpatient Care chemical products and

wholesaling brokering investment advice

Transportation also moved higher margins

for food and alcohol retailing dropped

two and a half percent that's

interesting so really some some

broad-based uh producer Services uh

pushes here on pricing not great uh as

sort of a leading indicator for

inflation uh maybe being a little bit

more bumpy on the way down this is

leading our uh two-year treasuries and

10-year treasuries to pop a little bit

and of course as leading stocks

algorithmically and understandably to

slightly move a little lower we have

bonds right now at the 10-year treasury

jump into

4.135 still lower yields than we're uh

Mr Ackman shorted the treasure Market

but uh definitely still uh elevated

long-term inflation view means the fed's

not done yet well yeah no kidding and

this sort of contributes to that this is

again why I'm thinking the fed's going

to stay higher for a lot longer than

unfortunate certainly we really believe

uh they would final demand uh Goods

prices for final demand Goods edged up

point one percent in July no change in

June July increase attributable to

Federal demand for foods which rose 0.5

these are some of our leading indicators

here not so great uh let's see if we can

get a little bit more into the weeds of

some of this data as well as keeping an

eye on commentary here from Wall Street

we have uh yeah really I think the the

belief that the Federal Reserve probably

had a heads up on this report hence

their uh hawkish commentary yesterday

all right let's get into some of the

final demand numbers and see

specifically where some of this pain is

coming from and that'll give us maybe a

little bit more insights here

all right let's get that imported all

right while it Imports I'll start

popping over and going through it okay

so here we go

so let's see here where are our Rises

June to July on the far right side final

demand for food 0.5 not great Energy

Zero on PPI once you factor in all the

averaging out fine final demand Services

look at where we've been with final

demand Services we've been at negative

0.1.2.2 negative point one boom all of a

sudden an explosion to 0.5 that is a

much higher than expected Services read

not good this is the one place uh we

really didn't want to see a warm read

apparel wholesaling paper all of these

going negative we've got TV video

photography equipment negative we've got

sporting goods and Lawn and Garden Care

these are up hardware and building

materials up 5.6 this likely because of

the construction boom that you're seeing

in real estate right now where a lot

more home builders are building a lot

more aggressively because of the

shortages of Housing and elevated

housing prices Consumer loans went

negative portfolio management that's

incredible that's when uh financial

advisors actually take people's money in

sort of the phrase is called AUM right

assets under management they actually

take people's money and manage it for

them and portfolio management exploded

here 7.6 percent

wow uh tax prep service is also a little

bit of a pop here of 1.6 percent we've

got let's see what else here this is a

nursing home care of 0.6 Hospital

outpatient 1.7 sorry it's a sorry that's

point seven percent look at this

arrangement of cruises and tours so like

a travel planner up 1.5 percent

arrangement of vehicle rentals down 1.5

percent but arrangement of flights up

1.3 percent tax prep we already covered

up 1.6 percent so really a lot of some

of those core producer prices actually

trending up a bit uh you've got uh

travel accommodation services in the

intermediate demand negative but again

that's that's uh that's going to be more

of like your actual hotel service rather

than the arrangement service it's almost

like services for services are becoming

more expensive interesting

okay

what else aircraft aircraft's always

been expensive non-residential property

management fees up 5.2 percent good Lord

Hardware building materials up we

already covered that okay so it appears

that what you've got here in the PPI

numbers are well unfortunately not good

news unfortunately some of those core

Services uh whether it's uh Financial

related or travel related or property

management related building related

aircraft related some of those core

services are seeing a little bit of a

spike now it's possible that you know as

I always say one report doesn't make a

trend that hey you know maybe that's

sort of like a you know some of the the

volatile back and forth stuff that we

can get every uh every month but uh it's

definitely something markets are going

to consider a lot more than a benign PPI

report we've actually been very used to

just getting very benign PPI reports

where ppi is stable to down and always

seems to come in softer the fact that

now it's coming in hotter than expected

on almost every Accord the only thing

that's coming in softer are the

revisions for last month which you know

big deal uh the the current data is a

little bit more aggressive

it's going to leave people a little bit

concerned maybe a little bit gun shy

again especially regarding those

interest rate sensitive sectors

automotives

solar growth trades those are going to

likely get hit harder as as we still try

to figure out is inflation actually gone

to many regards we expect it it to

essentially Trend towards zero the

problem is it's not a straight line to

zero it's a bumpy line to zero and it's

that bumpy line to zero that actually

has a lot of bears really concerned that

look it's not inflation is here forever

it's gonna stay forever it's inflation's

just going to take longer to get down

that's going to leave the FED aggressive

for longer and with an aggressive fed

for longer it's going to take longer to

get those rate Cuts uh maybe they'll

come right before the election still

think that's true but a bumpy report

like this will definitely reiterate that

all right this isn't going to be

straight

down with the exception of maybe the

stock market which could be straight

down

I don't think that's particularly likely

I'm saying that mostly

facetiously but I do think it is very uh

natural to see a little bit of an

accelerated decline on the retracement

here unfortunately though for the NASDAQ

an accelerated retracement here beyond

the 373 level is not great because it

sets us up for the next retracement

level sitting at 3 48. and I don't

particularly love where this chart is

sitting right now because it does

indicate that we have somewhere around

another potentially five percent drop

ahead of us on the cues and

unfortunately you're going to break more

retracement channels you can see the

same thing here on Tesla rejecting

almost perfectly at the 300 retracement

level breaking right through the 258 as

we just continue to extend this drag on

uh the bearish narrative that hey the

fed's going to end up over overdoing it

and so that's really what we're seeing

here obviously we've had a phenomenal

run since about April where it's almost

been every single day we've seen the

market green uh yesterday Tesla was up

1.3 percent today it pre-market it's

down about one percent and phase

yesterday down one four down point seven

now in pre-market uh queues rotating

down let's take a look at Apple here

just to see how some of these megas are

moving Apple down 12 bips yesterday only

about four bips right now uh obviously

well off uh its highs of nearly 200 per

share msft same thing here well off its

highs of 366 sitting down at its next

FIB retracement level and you jump on

over to Nvidia as well and you can see

Nvidia is getting rejected by the

extended FIB level uh and uh it's now in

a No Man's Land potentially setting up

to trade right back down to about 346

which wouldn't be great so keep an eye

on this I I do think this will probably

be still you know there's still some

there's still some legs to sort of this

bear Market uh pure like adjustment that

I think we're going through before we

get any kind of more confidence that uh

okay we can start pricing in fed pauses

and maybe Fed rate Cuts so in other

words probably still

a week two three weeks to go of pain

August might still be a bit painful

we'll get Jackson Hole I think Jackson

Hole from the Federal Reserve will be uh

very clarifying for markets and

hopefully that leads into the pause

narrative and the eventual cut narrative

where we start seeing some softening

from the Federal Reserve and actually

see what looks like a pretty nasty uh

double top here for trade desk trade

desk ran all the way up to about 91

dollars this has been sort of a stealth

trade I've had exposure to this as well

and it's been a a stealth trade that has

just been riding up up up up up up up up

up uh but here uh just in the last a

couple weeks here since about that July

19th Peak we've seen a bit of a

correction back down the next FIB level

and the question now is do we break

these next FIB levels of support or are

we going down even further today's PPI

inflation data unfortunately extends the

possibility that we might still be in a

little of a bearish environment for a

little bit longer so let's take a look

at how the bond market is now reacting

bond market we are looking at uh sitting

at almost 4.14 on the 10-year treasury

keep in mind Bill Ackman shorted

treasuries when the tenure was sitting

at about

4.2

when yields are higher it means prices

are falling

so that actually means Prices rose a bit

since akman's short so he's kind of

upside down a little bit not much and

there's this idea that

from Bill Ackman that yields are

actually going to rise a lot more

leading prices to fall more and then

Ackman to profit right now a lot of

folks though we're looking at this and

saying well here's my opportunity to

load up on Treasury bonds because

between now and when the FED finally

realized they have to aggressively cut

you'll probably see a massive bond

market rally and so that's leading a lot

of people to get very excited about

potentially getting into bonds as as

quickly as possible so uh that's uh

that's an idea if you can you know hold

out to uh next uh probably next summer

to fall right before election timing uh

for for some serious rate cuts and then

of course the question then is will we

be in a deep dirty recession by then and

that's the big old TVD so that does it

for PPI data now I want you to know this

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