Latest / Markets with Megan: A Quick Financial Markets Update / 5.1% Producer Inflation: Should You Be Worried? | S3 E150 | 06-11-26

Transcript

5.1% Producer Inflation: Should You Be Worried? | S3 E150 | 06-11-26 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: We got our second batch of inflation data this week.
• 0:03
  Megan Horneman: It is Thursday, June the 11th, and this is Markets with Megan.
• 0:07
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• 0:10
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• 0:12
  Megan Horneman: Also share it with your friends, family, colleagues, anybody who wants to dig into the details from the economic data that makes the headlines on a regular basis and what it means for the markets.
• 0:22
  Megan Horneman: So let's dig in today with the second piece of inflation data that we got for this week.
• 0:28
  Megan Horneman: Remember, yesterday we got the consumer price index.
• 0:31
  Megan Horneman: Today we got the producer price index.
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  Megan Horneman: And what it showed is that producer prices for May, they rose 1.1%.
• 0:39
  Megan Horneman: Now that headline number is primarily driven by gasoline oil.
• 0:43
  Megan Horneman: We know that story.
• 0:44
  Megan Horneman: But when you strip out food, energy, and trade, these uh components that are very volatile, it rose 0.8%.
• 0:52
  Megan Horneman: So on a month-over-month basis, we're rising at the fastest pace since 2022.
• 0:57
  Megan Horneman: When you look at it on a year-over-year basis, prices are rising 5.1%.
• 1:04
  Megan Horneman: Again, the highest since 2022.
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  Megan Horneman: Now, some of this will filter into the Fed's preferred inflation reading.
• 1:13
  Megan Horneman: That's PCE.
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  Megan Horneman: Airlines were up about 2.5% on an annualized basis.
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  Megan Horneman: Healthcare is going to add about four basis points to PCE.
• 1:22
  Megan Horneman: And then the big story was portfolio management fees.
• 1:26
  Megan Horneman: And these tend to rise when the equity markets are higher as fees are based off of an assets under management.
• 1:32
  Megan Horneman: So that was up 4.8% on an annualized basis.
• 1:36
  Megan Horneman: The other big thing, key takeaway from this report is that it's showing that the upstream costs or what businesses have to pay for to produce their goods is rising at a pretty rapid pace.
• 1:50
  Megan Horneman: We haven't seen it completely filter into the consumer yet.
• 1:54
  Megan Horneman: There tends to be a lag, but the question is will it filter into the consumers or are consumers going to hit back?
• 2:01
  Megan Horneman: And someone's going to have to eat that cost.
• 2:03
  Megan Horneman: So at the end, that could be the companies or the producers.
• 2:07
  Megan Horneman: Some people are saying, hey, it's not as bad as we thought, but it's pretty bad.
• 2:21
  Megan Horneman: Um, let's just put it that way.
• 2:23
  Megan Horneman: So this is going to keep the Fed unlikely to do anything at next week's meeting.
• 2:28
  Megan Horneman: The new uh chairman, Kevin Warsh, will come in.
• 2:32
  Megan Horneman: We'll get a little bit more indication from him on what he sees.
• 2:36
  Megan Horneman: Is he going to be hawkish like the rest of the committee?
• 2:39
  Megan Horneman: Is he going to downplay these supply shocks and the shocks because of the geopolitical tensions?
• 2:44
  Megan Horneman: Or are we going to get a hawkish um Kevin Warsh?
• 2:47
  Megan Horneman: And this is something that he was for a very long time prior to coming and taking this role.
• 2:52
  Megan Horneman: That meeting's next week.
• 2:54
  Megan Horneman: We'll have one more uh piece of economic data for the week tomorrow, and it's the preliminary reading on the University of Michigan sentiment index.
• 3:03
  Megan Horneman: Today the markets have rebounded after a couple of pretty uh weak days.
• 3:08
  Megan Horneman: We still do see a lot of uncertainty around what's going to happen, a lot of uh news coming out of the White House with a uh potential attacks on Iran.
• 3:17
  Megan Horneman: So we'll wait and see with that.
• 3:18
  Megan Horneman: But today, I think there's just a little bit of a bounce from that weakness and then optimism around the SpaceX IPO that's supposed to launch tomorrow.
• 3:26
  Megan Horneman: If you want a history of our podcast, you can go to marketswithmegan.fm.
• 3:30
  Megan Horneman: Thank you.