Producer Prices SCREAM Inflation, 4.2% YoY (Highest Since 2011) After Powell Tells Congress That Inflation Risk Is Low

In March, Fed Chair Powell told Congress that inflation risk remains low.

The Bureau of Labor Statistics this morning reported that US Producer Price Index Final Demand year-over-year rose a whopping 4.2%, the highest rate since 2011.

Producer prices (output) are a measure of the change in the price of goods as they leave their place of production (i.e. prices received by domestic producers for their outputs either on the domestic or foreign market).

Even without food, energy and trade, Final Demand Prices rose 3.1% year-over-year.

Of course there is going to be inflation with Biden’s multi-trillion spending spree and The Fed’s prodigious money printing.

Now, defenders of The Fed flag will say that 4.2 is still low. But with Biden and Congress going wild with spending, its only just begun.

Equity managers need to thank Powell and Yellen (Powellen??)

Taylor Rule (Rudebusch) Calls For Fed Funds Target Rate Of 2.66% (Fed Rate Is Currently At 0.25%)

Amazingly, The Federal Reserve keeps stoking the asset bubble with near zero interest rates. Despite the fact that the Taylor Rule (Rudebusch specification) is calling for a Fed Funds target rate of 2.66%.

Uber-dove Charles Evans, President of the Chicago Federal Reserve, is calling for more gas on the asset bubble fire with a TR estimate of -1.13 for the Fed Funds Target Rate.

I call this The Fed Fire.

Home Price Growth Accelerates To 11.2% YoY As Fed Throws Gas On The Housing Bubble (Lumber Prices Have Over TRIPLED In 1 Year)

S&P/Case-Shiller released the monthly Home Price Indices for January (“January” is a 3 month average of November, December and January prices).

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported an 11.2% annual gain in January, up from 10.4% in the previous month. The 10-City Composite annual increase came in at 10.9%, up from 9.9% in the previous month. The 20-City Composite posted an 11.1% year-over-year gain, up from 10.2% in the previous month.

Phoenix, Seattle, and San Diego continued to report the highest year-over-year gains among the 20 cities in January. Phoenix led the way with a 15.8% year-over-year price increase, followed by Seattle with a 14.3% increase and San Diego with a 14.2% increase. All 20 cities reported higher price increases in the year ending January 2021 versus the year ending December 2020.

Las Vegas NV is the slowest growing city in terms of prices, but still at 8.5% YoY. Even tax-heavy Chicago posted an 8.9% YoY gain in prices.

Yes, The Federal Reserve is throwing gas on the housing bubble.

And lumber prices have over tripled in the last year.

And then there is FHFA purchase-only home price index growing at 12% YoY.