From Briefing.com:

11:43 Truck prices drive Core PPI lower - Ritholtz Research

Ritholtz Research notes that this morning, Core PPI (excluding food and energy) fell 0.3% -- the first such drop since Oct 2005. Stocks rallied, as did Bond prices, driving yields down 75 bps across the curve. Firm notes that Vehicle prices fell 2%, with Car prices down 0.8%. But the real action was in dropping Light Truck prices: given the Q2 surge in Oil and gasoline, it's no surprise that light truck prices fell 3.1%. Firm says the drop in Car and Truck prices accounts for nearly the entire decline in the core PPI. Prices for oil and other materials continue to rise, and prices of metals and chemicals continued to rise. These price increases include a 4.8% rise in energy materials, and a 1.3% gain in prices of industrial materials. And, productivity growth is slowing. Firm says the bottom line is that this is a far less benign number than would appear at first blush.

With substitution effect, owner equivilent rent, hedonic indexing, etc., the cpi calculation is a joke. Sorry, but it absolutely is. The problem is, traders will trade off the number, so you have to use it.

How they can "generate" this data with a straight face is beyond me.

Just to repeat myself all over again... Rising energy prices aren't inflationary. If we're sending more of our discretionary income to OPEC, it means we're chasing fewer goods here. Demand goes down.

Evidence? How about Starbucks earnings? Cheesecake Factory's earnings? Whole Foods earnings? Today, Wal-mart earnings.

Instead of using the extra jingle in the pocket to get a frappucino or splurge on ostrich burgers, that money is heading to OPEC. So maybe folks have to cut back on the splurges a bit.

I have no idea how these numbers are calculated and neither does anyone else. How could their be a variance of .5 on PPI from concesous expectations?

Logic tells you that if someone changes the way something is calculated it likely was done to the benefit of the powers that be. Looking at all of the economic related news releases tomorrow, (CPI, housing starts, and capacity utilization ), I expect to see favorable numbers in terms of is impact on equity markets. CPI will be below the .3 forcast, and capacity utilization will be below 82.7. This will further heat up the markets.