Is there inflation or isn’t there?  Today’s PPI final demand report would suggest there is not.  The final demand index declined 0.1% in December, versus an expectation of an 0.2% increase. Excluding food and energy, final demand was down 0.1% versus estimates of +0.2%.  

• Year-over-year, the index for final demand +2.6%, versus +1.7% in 2016
• November +3.1%
• Core PPI + 2.3% versus +2.4% in November
• Prices for final demand services -0.2% due to a -0.6% in final demand trade services
• Final demand goods flat in December, as the food index was -0.7% 

Initial claims ticked higher again as unemployment claims increased by 11,000 to 261,000 for the week ending on January 6.  A better gauge, the 4-week moving average increased to 241,750, up 9,000.   Continuing claims for the week ending December 30, was 1,867,000 down 35,000 and the 4-week moving average for continuing claims came in at 1,913,250 down 5,500. Despite the increase in the past several weeks, labor markets continue to be tight and claims have been below 300,000 for 149 consecutive weeks.

All the major indices are at the best levels of the trading session. Seven of the 11 S&P sectors are in the green with energy leading the way, +2%, followed by industrials, +.09%, materials +0.8%.  Consumer Staples, Health Care, Real Estate and Telecom Services are today’s laggards.

 Advancers are roaring past decliners 2170/729 on the NYSE and 2122/777 on the Nasdaq.