The producer price index came in at zero percent for July. Economists predicted 0.2 percent. They missed by 0.2 percent, which in their world counts as being basically right.
This is the same group of people who get paid six figures to guess what a number will be one month from now using every data point ever collected in human history. They had a 50/50 shot at guessing the direction. They whiffed.
Somewhere right now a retail trader is staring at his ThinkorSwim account wondering if this means he should buy calls on wheat futures. He's reading the headline over and over. He's Googling "what does PPI mean for my positions." He's three clicks away from a YouTube video titled "PPI CRASHES: What This Means for YOUR Portfolio" posted by a guy wearing a headset in his garage.
The number was flat. Not up. Not down. Flat. The wholesale price of everything America produces stayed exactly where it was. This information will change precisely nothing about how anyone invests or what the market does tomorrow. The S&P will move 1.2 percent in some direction for reasons that have nothing to do with wholesale prices, and seventeen different financial news outlets will explain why the PPI report caused it.
Technical analysts saw a hammer candle on the daily chart three weeks ago. They already knew where resistance was. They don't care what producers paid for anything. They care about the 50-day moving average and whether volume confirmed the breakout. The PPI could've come in at 47 percent and the trade would be the same.
But sure, let's all pretend the Dow Jones consensus nailing it within 20 basis points would've unlocked some secret about market direction. Let's pretend economists earn their salaries.
Photo by on Unsplash
Leave a Comment