PPI Numbers Benign

As it’s always better to look at the actual data behind an economic headline, here’s a look at today’s PPI numbers.  Nothing was significantly outside of expectations, but I think the larger take away is that the risk of deflation continues to fall.  That said, much of the recent pickup in inflation has been a product of rising food and energy prices, so it’s hard to take deflation off the table completely.  But with the yearend rally in full bloom, it’s not too surprising that this report, as well as those yet to come this week, will be largely overlooked.  The larger question, then, is what sort of stage is set for the early part of next year?  For my part, I see the economic fundamentals improving, but I’m still wary of a pullback given the scale of the current run.  But unlike the past two years, buying on dips will probably prove more successful than selling into rallies.

Until later.....