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The Core Producer Price Index, measuring the cost to manufacture goods, dropped from a year-over-year increase of 6.2% last month to only 5.5% this month. The all-encompassing PPI lost 1.1% and is now sitting at 6.2%YOY increase. Declining costs to produce leads to lower costs to buy, which is disinflationary and good for the prospect of lower interest rates in the future. 

Retail Sales receded -1.1% on top of last month’s -1.0 retraction.  Stripping out cars attenuated the decline to only -0.7%.  Not too shabby.  Consumer Confidence was up 5 points this month, so we’re feeling good about spending money, but we’re buying less stuff.  Also good for interest rates.

The National Association of Home Builders’ Housing Market Index rose this month to by four points to 35.  Remember that with the HMI, a reading of 50 or better is considered positive, so 35 doesn’t really make one feel al warm and fuzzy, but a four point gain is a step in the right direction. 

Incidentally, Ken Fisher, of Fisher Investments, stated today on Fox News that “inflation is deader than a doornail”.  I wouldn’t go that far just yet, but costs are declining across the board. The likelihood that the FOMC hikes the overnight rate another 0.25% on Feb 1 now lies at 96%.