TL;DR
Wholesale prices rose less than expected in December (good news!), but overall inflation is still high and the market remains cautious (bad news!). The real test is Wednesday’s CPI report.
Story
“PPI Better Than Expected?” Yeah, right. Don’t pop the champagne just yet, folks. Today’s PPI report shows wholesale prices rose only 0.2% in December, lower than the 0.3% everyone was bracing for. Sounds good, but peel back the layers and you’ll find a different story.
First, let’s talk “core” PPI, which strips out volatile food and energy prices. It was flat for December, but still up 3.5% year-over-year. That’s like saying your car is running great, ignoring the fact the engine is on fire. Sure, inflation might be cooling, but it’s still burning a hole in our pockets.
The overall PPI is up 3.3% year-over-year, creeping higher. Remember those whispers about the Fed cutting interest rates? Think again. With inflation still this high, they’re more likely to keep rates where they are or even raise them again.
The market’s reacting with cautious optimism, like a deer in headlights. SPY’s up slightly, VIX is down. But this is the same market that cheered when the Titanic’s swimming pool opened. Don’t be fooled by short-term fluctuations. The real test comes Wednesday with the CPI report, which measures consumer prices.
This reminds me of the dot-com bubble, when everyone was convinced the internet would change everything. And it did, but not before a lot of folks lost their shirts. The same thing happened with the housing bubble in 2008. Blind optimism is a dangerous game. Don’t assume today’s “good” news guarantees a smooth ride ahead. Be skeptical, be critical, and always remember: if it sounds too good to be true, it probably is.
Advice
Don’t let today’s “good” news lull you into a false sense of security. Stay skeptical, do your research, and be prepared for potential market volatility. Cash is king in uncertain times.
Source
https://www.reddit.com/r/wallstreetbets/comments/1i1692f/ppi_better_than_expected_market_relieved/