PPI came in hotter than expected on a monthly and annual basis in headline and core. Futures, which were up modestly heading into the print, are now down modestly – clinging to the 100-day SMA, 21 sessions after first topping it on rate hike taper hopes a month ago.continued for members…

Stocks remain focused on inflation, with CPI due out next Tuesday, the FOMC rate decision on Wednesday, and OPEX on Friday.

VIX continues to be moderately bearish, with a SMA10/SMA20 crossing in the offing early next week but a bearish (bullish for stocks) 50/200 cross occurring today.The reality, though, is that the 50/200 has consistently been a headfake for the past few years – with bullish crosses coming at VIX tops and bearish ones coming at bottoms. It’s hard to imagine that it’s a coincidence.EURUSD continues to be supportive of equities, with the “breakout” continuing without making new highs and a DXY “breakdown” without new lows. Oil and gas continue to slump, with potential support just below current levels for CL and 9% lower for RB.  XLE continues to hold the line.

Bottom line, this feels like the typical stall/ramp that we often have in front of CPI, FOMC meetings and OPEX. In this case, they also occur in December two weeks ahead of YE, which almost always comes with a ramp job.

Inflation is proving stickier than most prognosticators seem to expect, though I wouldn’t be surprised to see the Fed back off those 75 bps hikes anyway. The yield curve hasn’t been this inverted since 1981.If RB bounces by 1.88, inflation will not keep dropping as it has. If it falls through 1.88, then we’ll have negative YoY figures which will put significant downward pressure on CPI.Stay tuned.