Wally -
Thanks for the link to the archived CPI and PPI data. I guess I
learned AGAIN(a lesson learned over about a million times…)
that sometimes some data is more confusing than no data….
I only have data at this point for CPI/PPI/FIG thru 1994.
I defn don't have a long enough time period to do the data justice.
What little I have is fascinating to look at though. It's a pretty simplistic
spreadsheet, but if anyone wants it PM me w\ your email addr.
I've always kinda followed the #s because I was told to do so, but
never really took a big interest to really understand them until now.
I can thank BB for that. A lot of the following may seem extremely obvious!
I will collect more as I go, but I did come away with a few thoughts:
1) The FIG index defn seems to correlate better with PPI than CPI.
I would rank the correlation(from best to worst) as
core PPI, PPI/CPI, core CPI. FIG index I'm looking at is for
the U.S. CPI doesn't track it as well most probably because of global
import price pressures, the weaker dollar, etc.(I.e. - producers aren't
being allowed to pass on the changes). BTW, I have seen that there
is potential that this situation is ending due to the global recovery.
2) Core CPI is VERY VERY impressive! I reckon anyone that bets
core CPI will be anything much outside of +2% YTY is gambling big!
It's been in a pretty nice steady decline from 3% downto 2% over the
last 6 years. Amazing! No wonder everybody is convinced this
can last forever.
3) You can defn see the effects of energy in the PPI. Core PPI
actually tracks the lagged FIG index pretty closely. If I shift
the FIG index "fwd" by 11months, it VERY accurately predicts
the fall and turnaround of the core PPI in mid 1997. What little data
I have defn shows it is an extremely accurate directional indicator
for this.
4) Out of all of these, IMO we will 1st see a true indication of
rear view mirror inflation in the core PPI. Looks to me like that could
occur in the June or July data. If import prices continue to
rise as they have, and esp if the dollar starts to weaken from
it's current firming against other currencies… The question that
keeps haunting me right now is how long it will take Joe Q DayTrader
or Jane Q Market Guru to see it all coming. Am I gonna miss
out on a few months worth of NDX gains because I pulled the plug too
early?
5) It is extremely obvious in the data that the energy prices
are having a significant effect on the std CPI/PPI. I'm gonna
ignore those for the time being. A turnaround in the core CPI
will be what really scares me.
6) I am going to email ECRI and ask for data further back than
94, but I am open to suggestions on where else to go for it.
7) I'd like to add the FIBER info next, but can't seem to find
much historical data, yet.
There is a lot more to all of this than I am using! I'm actually just
scratching the surface of the info from BLS that you gave me the link to.
Heck, it's probably even more important right now to watch crude
and intermediate goods prices(a little earlier in the pipeline)
at this point. Those may give us an even earlier indication that
the sky really is falling.
The more I look at it, the more I want/need to rely
on the resources of places like ECRI, FIBER, etc.
It's also nice to have analytical sources such as
dismal available. Now that I understand the dynamics a little
better it's amazing just how much info can be found out there.
todd
|
