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This morning’s Prices Paid component of the ISM Manufacturing report for January was inflationary (see the chart below). Yes, unfortunately Ben, Main Street actually has to pay for things with marked to market prices. On a year-over-year basis, Prices Paid are up a staggering +133%!

I know, I know… the Federal Reserve claims to see none of this; 'tis the narrative fallacy of He Who Sees No Inflation (Bernanke). But the bond market sees it – that’s another reason why bonds are selling off today. For those who support this Bubble in US Politics, inflation is easy to ignore. Sadly, that doesn’t mean it goes away.

This Prices Paid reading of 70 (January) was a +13.8% sequential monthly acceleration from the December report. With headline Producer Prices (PPI) recently reported at +4.4% year-over-year, and Q4 GDP posted at +5.7%, this unsustainable and unreasonable policy of maintaining a ZERO percent “emergency” level for the Fed Fund rate is starting to really eat into the Times Man of the Year’s credibility.


Keith R. McCullough
Chief Executive Officer

He Who Sees No Inflation? - PP