Seasonally adjusted producer prices for final demand in the United States grew by 1.3% year-on-year in January, the largest increase since the index was established in 2009, the country’s Department of Labor reported on Wednesday. The final demand services index advanced 1.3%, while the prices for final demand goods grew 1.4%. For services, the 9.4% increase in prices for portfolio management contributed the most, while a 13.6% jump in gasoline prices affected the goods indicator the most. On an unadjusted basis, the index for final demand climbed 1.7%. Nick Note: this is  simply a fluke as the supply chain recovers. THEIR IS NO INFLATION AND THEIR WILL BE NO INFLATION. As you can see by this next story the Fed will not jump. The numbers we have seen today further affirms our view that a monster stock market rally is in progress followed by the mother of all stock market wipe outs!

The Federal Reserve Bank of Boston’s President Eric Rosengren said on Wednesday that if a problem with inflation was to occur, “the Fed will take care of it.” Although Rosengren noted he would be surprised if sustained inflation rate hit Fed’s 2% goal within the next year or two. He also mentioned that the major inflation measures right now are “quite low”. Rosengren added that payroll creation was very low in January and the United States still has “a lot more to do” to fix the labor market and its “quite large” existing gap. According to Rosengren, the coronavirus and vaccination developments still lead the economy and the labor market is disrupted. Nick note: It remains to be seen how effective the mass vaccinations really are and how long they will last. The bigger issue are the mutations and how fast the booster shot will take to develop and deploy. Markets are not bothered by such details. One thing this global plague has done its made the masses crazy as in stir crazy with a dose of cabin fervor. So look fpr the masses to go absolutely bonkers crazy and the markets will join in the fun. Like the stock market after WWII. But in the wings lurks two problems. the first being market valuations that can never be justified by profits never mind by dividends.  And the second  is the mathematical probability a strain of the virus emerges that starts killing the mass vaccinated people……