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Two Ways To Play: Eye Spy PPI


Strengthen your portfolio in good times and bad.


Bloomberg reports prices paid to producers rose in the month of April. The Bureau of Labor Statistics said today the Producer Price Index increased 0.2% on a month-over-month basis. The figure was less than the 0.4% increase economists had expected. More importantly, however, core PPI (less food and energy) rose 0.4% on a month-over-month basis. Economists were expecting a gain of 0.2%.

Gains in chemicals, fuels, and metals helped lead to an increase in raw materials. The report showed a surge in steel products and ag chemicals, which both jumped approximately 5.5%.

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Overall, wholesale prices are up 8.5% at an annual pace so far this year. This is largely inline with the 8.4% pace this time last year. However, core prices have jumped at an annual pace of 5.2% versus an increase of 2.1% in the same time frame of 2007.

The report showed that food prices were unchanged while fuel costs fell 0.25.

For more on the numbers, see Professor Kevin Depew's Five Things You Need To Know.

From the Bull Pen: We've talked about companies that are able to pass on costs with no problem. Companies like General Mills (GIS) and Kellogg (K) both remain options for bulls.

From the Bear Cave: Companies like General Motors (GM) and Harley-Davidson (HOG) remain in the bear cave.

No positions in stocks mentioned.

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