The PPI is released at 8:30. Inflationary pressures are expected to rise from the previous month, an environment that was discussed several months ago given the comparable year ago figures.
Every day we are inundated with pictures from the fires in California. The fires are hardly contained.
I am amazed that there have not been more reported deaths. Writing the incredible obvious my thoughts and prayers go out to all, especially those who have lost a loved one.
What will the economic impact be? Will the fires be a local or regional event?
Who is going to pay for the rebuilding? Will several insurance companies experience financial duress? What will the impact on premiums on a national basis? In some instances, will insurance become unaffordable? Will the federal government pay for most of the rebuilding?
What will be the impact on building supplies and overall inflation? How will it impact the federal deficit or bank loan portfolios? What about the jobs lost and the impact of the massive economic dislocation?
How will fires impact California politics? How will the state respond legislatively?
Or will the fires be lost in the next news cycle?
The questions are innumerable, and the answers are yet quantifiable.
Changing topics, led by the mega techs, the S & P 500 dropped below where it ended on November 5, just before Trump was reelected. The catalyst for the decline is yet another change in monetary policy expectations and higher long-term interest rates.
How will today’s PPI influence the inflation outlook? Later this week is the commencement of earnings season as several bulge bracket banks release results. Will they comment about the potential impact of the California fires? The banks’ provision for loan loss reserve and non-performing assets will be closely scrutinized in an attempt to gauge the health of the economy.
Last night the foreign markets were up. London was down 0.14%, Paris up 0.78%, and Frankfurt up 0.59%. China was up 2.54%, Japan down 1.83% and Hang Seng up 1.83%.
Futures are up about 0.25% ahead of the PPI. The 10-year is off 2/32 to yield 4.79%.
