Yesterday, after another big upswing and a late-day swoon, we saw more subdued green arrows at the market close on our major indexes, marking a “throwback” of sorts to a couple years earlier in this 9-year bull market — double-digit gains on 20-50 basis-point percentage growth marked the steady (but boring) trading environment we’d grown accustomed to seeing previous to this year.
Obviously, 2018 has been a much different story, with all-time highs being reached almost daily back in January to record point drops in February on concerns of economic overheating, to new and major global economic threats last month.
For the Producer Price Index (PPI) in March, which came out ahead of today’s bell, final demand month over month reached +0.3%. This was hotter than the +0.1% expected. Subtracting more volatile food & energy costs, this number also hits +0.3%, one tick higher than estimates. Taking out trade from this figure, +0.4% is the result.
Year over year PPI final demand for March, ex-food & energy, amounted to +2.7%, +2.9% stripping out trade. We also see zero revisions from the previous month’s results. These numbers are all hotter than expected. The question for analysts now is: will tomorrow’s Consumer Price Index (CPI) follow suit? It would stand to reason, with pricing negatives dropping out of year-over-year comparisons, that Wednesday’s CPI headline should be similarly robust. But we’ll see tomorrow for sure.
Because tensions regarding a potential trade war with China had only just emerged last month, we don’t see — or expect to see — any pricing constraints in the March figures. Food prices rose 2.2% last month while Energy fell 2.1%; we expect the latter to reverse in next month’s numbers, while it’s hard to predict the former at this stage.
Market futures are up big a half-hour before Tuesday’s opening bell, with the S&P 500 +28, the Dow +300 and the Nasdaq +90 points. With trade war fears apparently cooling in the early part of this week — to say nothing of the expected testimony of Facebook (FB - Free Report) CEO Mark Zuckerberg on Capitol Hill today and tomorrow, hopefully clearing the air on the topic of social media and perhaps future regulations on the industry — we’re not seeing headwinds as stormy as we have over the past couple weeks.