Pipeline inflation remains hot! Plus a surprise for gold investors.

January 13 (King World News) – Graddhy out of Sweden:  Up: US rates, gold, global inflation, US yields, you name it.

Down: USD (most probably from yearly cycle high, maybe 3 year cycle high) +Fed being hawkish behind the curve, trying to control thinking/behavior.

Something’s got to give, and I do not think it will be commodities…

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GDX vs Gold
Graddhy out of Sweden:  My ultimate long term chart for this precious metals ratio has been backtesting/tagging blue trend line this whole consolidation. We now have a 2nd bullish reversal candle in the making backtesting blue line + fib 50%. Big bases and big moves take time to build.

SURPRISE FOR INVESTORS IN MINERS:
Mining Stocks Preparing To Blastoff vs Gold

Inflation
Peter Boockvar:  The December PPI was up .2% m/o/m headline and .5% core. The headline figure was 2 tenths below expectations but offset by a 2 tenths upward revision to November to 1%, so thus as expected when taken together. The core rate was in line but November was revised up by a 2 tenths too to a .9% increase. Versus last year, PPI was up 9.7% and 8.3% ex food and energy. Food and energy prices fell m/o/m but are still up 13% and 31% respectively y/o/y.

Core goods prices rose another .5% m/o/m and 9.4% y/o/y. Service prices were up by .5% m/o/m and 7.9% y/o/y driven by transportation and warehousing which we know is a problem. Pricing here jumped 1.7% m/o/m and by almost 17% y/o/y. Service prices were also helped by higher margins for gasoline stations.

Pipeline Inflation Remains Hot!
Inflation in the pipeline remains hot. Core processed goods prices rose .7% m/o/m and are up 24.4% y/o/y. While unprocessed prices fell 2% m/o/m, they are still up 38% y/o/y.

Bottom line, as I stated this morning, the CRB food and raw materials indices are basically at record highs, give or take less than 2% so there is no relief yet on the commodity front. I also included transportation stats and we haven’t seen much of an easing yet but hopefully we will in the coming months and quarters. Either way, the inflation stats are red hot but should top out on a y/o/y basis by February because of tougher comps but I’ll say again, that any easing in producer price pressures will not quickly show up in a reduction in consumer prices because the former has run much faster than the latter and that means consumer price increases will continue to catch up.

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