It’s the 1970s again…now that’s some inflation! Plus we may have already seen the daily low for gold.

September 10 (King World News) –
Graddhy out of Sweden:  Still backtesting my blue falling wedge after breakout. Second day backtesting today and indicator seems to be resetting without price dropping very much, which is bullish. A move back above 200 day moving average would probably mean we have an early daily cycle low in place.

Early Daily Cycle Low In Place If Gold Breaks
Back Above 200 Day Moving Average

Peter Boockvar:
  Headline PPI in August rose .7% m/o/m and .6% core. The core rate was as expected while the headline was one tenth more. Versus last year, headline PPI is up 8.3% and by 6.7% ex food and energy.

Now That’s Inflation!

Core goods price rose .6% m/o/m after 4 straight months of 1% increases and an .8% rise in March. Thus the annualized rate of PPI gain for core goods over the past 6 months is 10.8%. Services prices were up .7% m/o/m and rising at an 8.4% annualized rate over the past 6 months…

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We all know about the skyrocketing costs of shipping goods and we saw a 2.8% m/o/m increase in the ‘transportation and warehousing’ category after a 2.7% spike in July. This is running at a 25% annualized pace over the past half year.

Inflation in the pipeline is still pretty robust. For processed goods, core prices rose 1.3% m/o/m and are up 26% annualized over the past 6 months. Unprocessed core goods prices were flat for the 2nd month but are still up 28% over the past 6 months annualized.

Bottom line, these are 1970’s type inflation readings and while the time periods are obviously different in many ways, it confirms again that we have the most intense inflation pressures since then. As the market will focus more on Tuesday’s CPI and the figures today were about as forecasted, bond yields are little changed in response, while higher on the day. Quietly inflation expectations are rising again with the 5 yr breakeven up for the 4th straight day to 2.61%, matching the highest since the end of July.

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