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This morning's PPI report for the month of July was 2x higher than the Street's expected number. This caught some of the "deflation" bulls offside. Reported inflation is not a straight line to the rate of change in the CRB Commodities Index. Pharmaceuticals and Autos inflated materially.

The attached chart shows the inflation that continues to mount within the cost structures of US producers. Irrespective of the fact that this report is a lagging economic indicator, be sure that this will be a "Main Street" political football that Obama shows no shame in throwing down field.

Stagflation remains economic reality in the USA, regardless.