.... was interesting.

"Core" (ex-food and energy) was flat.

But full was up 1.0% (monthly) - that's a 12% increase.

And folks, that's the number that hits your wallet. Not the "ex" number. Of course the PPI hits it indirectly, because the PPI measures the prices going into manufacturing, not coming out.

Of course the futures immediately reacted to the green on the "zero" ex number. Duh. And dumb. Anyone who thinks that a 12% inflation rate on the components going into our manufacturing is good news, and won't show up in the form of higher consumer prices - much higher - is simply delusional.

You can "ex food and energy" in the CPI, but it doesn't help you when the energy number is up - and it is, big. Why? Because "energy" is the point of manufacturing. Indeed, this is a basic matter of thermodynamics - the natural state of the universe is "disorder", and the second law of thermodynamics says that in order to keep things "in order" or to "increase the level of order" you must input energy.

That new car's natural state is a pile of rust and petroleum products. To make it into a car (and keep it as a car) you must input energy. This is the essence of manufacturing, of course, and exempting energy from the PPI "core" number is non-sensical.

Never mind that in the data were some shockers. Core crude goods (the raw "stuff" you use to make goods) was up seven percent.

But..... that's our government schools (again) for you.

It will be interesting to see how the markets react today. I would not be surprised at all to see a modest or even fairly-solid rally; we still have gap to fill on the 'Daq and DOW. But the higher we grind, the more explosive the break is likely to be.

Trade this? Be careful. If you're going out on the long side, make sure your stops are set tightly to prevent a whipsaw that screws you hard when the reversal comes - and come it will.

By the way, if you want to see "irrational exuberance" in action, look at the homebuilder stock prices yesterday. Up strongly on..... what? More air into the bubble? There were no related earnings releases, no related information out on a data point perspective - and they rallied big.

Relief rally? Maybe. But rational? Certainly not.

Don't follow the herd; there might be a cliff in front of them and if you're in the middle of the pack you won't see it until you step off! Instead, do your own thinking.

After all, it's your money.