Fed Confused As Initial Claims Improve, Producer Price Inflation Most Negative Since April

A pair of conflicting economist reports this morning.

On one hand, the DOL reported that seasonally adjusted Initial Claims dropped from an upward revised 344K to 323K (a number which will be revised higher as is now the tradition) below the expected 335K, which incidentally in an ultrasensitive environment to every piece of good news may be bad news as it means the November NFP report may come in better than expected and cement the Fed’s intention to taper as soon as December at least according to yesterday’s FOMC Minutes. Then again, the BLS noted that the decline was influenced by the Veterans’ Day holiday, so once again what is really going on beneath the surface is very much unclear. As Bloomberg notes, as a result of the holiday, “investors should anticipate a likely reversal next week in the pace of firings.” Ironic when the bulls are forced to cheer for bad economic data so the Fed balance sheet-driven melt up may continue. Continuing claims rose modestly by 66K to 2.876MM, slightly higher than expected, but well below the 3.325MM at this time last year.


On the other hand, Producer Price Inflation followed the recent CPI decline, and dropped by 0.2% in October in line with expectations, making the October headline PPI print the biggest drop since April’s -0.7%. Broken down by component, foods saw an increase of 0.8%, offset by a 1.5% drop in energy. PPI ex-food and energy rose by 0.2%, a fraction above the expected 0.1%, and rose 1.4% compared to a year earlier.

So adding the two reports together: Claims suggest Fed may taper soon if the labor market is indeed improving (with companies hiring part-time workers), while the PPI confirms that at least according to the BLS, inflation is nowhere to be found, suggesting much more QE in stock.

Just you typical, run of the mill, baffle with BS day.


via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/HZvm52gCElQ/story01.htm Tyler Durden

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