Latest / Markets with Megan: A Quick Financial Markets Update / 1.3% PPI Surge, 10% Energy Spike: What's Next? | S3 E173 | 10-15-26

Transcript

1.3% PPI Surge, 10% Energy Spike: What's Next? | S3 E173 | 10-15-26 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: Another day of economic data and another mixed picture for the Federal Reserve.
• 0:04
  Megan Horneman: It is Thursday, October the 15th, and this is Markets with Megan.
• 0:08
  Megan Horneman: If you like this podcast, you can subscribe.
• 0:10
  Megan Horneman: There's an alarm bell that you can hit.
• 0:12
  Megan Horneman: Also share it with your friends, family, colleagues, anybody who hears that economic data on a regular basis and then wants to understand how that impacts the markets.
• 0:21
  Megan Horneman: So let's dig in.
• 0:22
  Megan Horneman: It's been a pretty busy couple days.
• 0:24
  Megan Horneman: It's been all about inflation and the consumer.
• 0:27
  Megan Horneman: So yesterday and today, we yesterday we got the consumer price index, today we got the producer price index.
• 0:33
  Megan Horneman: Both of them were a bit hotter than expected.
• 0:36
  Megan Horneman: And when you look specifically at the producer price index, so this is the cost that before the prices go on to the consumer, this rose on a month-over-month basis the fastest since April of 2023.
• 0:49
  Megan Horneman: It was up 1.3%.
• 0:51
  Megan Horneman: Now the bulk of that was because of a 10% increase in energy prices.
• 0:55
  Megan Horneman: But when you stroop strip out energy, food, and trade, that also came in higher than expected.
• 1:01
  Megan Horneman: That's uh that was up five-tenths of a percent.
• 1:04
  Megan Horneman: And what we saw was some of the areas that are impacted by the trade war with Canada, um, trade, transportation, and warehousing, they saw pretty big jumps for the month of September.
• 1:14
  Megan Horneman: So from an inflation standpoint, definitely shows inflation is not behind us.
• 1:19
  Megan Horneman: Um, you do also see a gauge of the airfares in that report, and that jumped 5%.
• 1:25
  Megan Horneman: Remember, that is a direct impact into the Fed's preferred inflation indicator, PCE.
• 1:31
  Megan Horneman: So we'll get that.
• 1:32
  Megan Horneman: Um, I believe it's it may be next week or the week after, but we'll always come back and give you the report on that.
• 1:38
  Megan Horneman: We also got data on the consumer today, and that the this is where it gets interesting.
• 1:41
  Megan Horneman: That headline number looks pretty strong, but two things to remember these numbers are not inflation adjusted, and at the headline, it was significantly impacted by higher gasoline station sales, and that's because the prices were higher in the month of September.
• 1:56
  Megan Horneman: But when you strip out all of those items, what's called the control group that takes out food, gas, building materials, that was actually only rose 0.1%.
• 2:06
  Megan Horneman: So that's gonna likely result in a bit of a down on Word Revision 2 third quarter GDP because that was on the softer side.
• 2:14
  Megan Horneman: And what does this mean for the Federal Reserve?
• 2:16
  Megan Horneman: I still think that they probably should raise interest rates in October, but they'll probably hold off for the month of October, but it is gonna be a chance that they will have to raise in December.
• 2:28
  Megan Horneman: And that especially if these prices continue to move higher, we don't see any really end in sight in the geopolitical tension.
• 2:35
  Megan Horneman: So we're not too optimistic that inflation is gonna have any catalyst to push it lower in the near term.
• 2:40
  Megan Horneman: The markets actually, from an equity perspective, started off the day pretty rocky.
• 2:45
  Megan Horneman: The SP 500, the NASDAQ, anything tech related got dragged lower in the beginning of the day.
• 2:51
  Megan Horneman: The Dow Jones, though, had a great day.
• 2:53
  Megan Horneman: It was up over 500 points.
• 2:54
  Megan Horneman: Remember, that's not as tech heavy as the SP 500.
• 2:58
  Megan Horneman: But um the the main catalyst behind all that was the significant decline in yields.
• 3:03
  Megan Horneman: This was a global phenomenon, but we saw a pretty big move lower in yields, which it does kind of count contradict being a higher inflation print.
• 3:12
  Megan Horneman: But what it is telling us is that the Fed does have the reason to continue their tightening cycle, and that gives a little bit of optimism that maybe eventually we can get inflation under control.
• 3:21
  Megan Horneman: That's all that we have today.
• 3:23
  Megan Horneman: And um, if you have want to see a history of our podcast, you go to marketsmegan.fm.
• 3:27
  Megan Horneman: Thank you.