PPI Flatlines as Pre-Market Movers Surge

Grant Calloway

August 13th, 2026, and the, the morning tape is already humming. Right at the top, the July Producer Price Index just printed flat, 0.0 percent month on month, coming in under that 0.2 percent forecast everyone was eyeing. That drags the annual wholesale rate down to 4.7 percent, landing right on the heels of yesterday's 3.4 percent CPI print. And remember, at 8:30 AM Eastern, we get Initial Jobless Claims, which will offer a fresh reading on labor market conditions, with consensus pegged right around 202K.

Grant Calloway

Now, if you break down the, the actual mechanics inside this BLS report, there is a clear split under the hood. Prices for final demand services increased 0.2 percent, and the index for final demand goods decreased 0.7 percent. That is a real divide. From where I used to stand on the floor of the New York Stock Exchange, when you see industrial input costs dropping seven tenths of a percent in a single month, you have to ask a very basic question. Is that genuine disinflation, or is it, uh, is it an early warning signal of a factory floor slowdown? When raw materials get cheaper because nobody is buying them to make finished product, that is not a victory lap. That is a demand problem.

Grant Calloway

But look across the board at the pre market movers before the bell, because individual tapes are flying everywhere. Cava Group, CAVA, is leaping 12 percent right now after delivering a second quarter earnings beat. They brought in 19 cents per share versus the 18 cents expected, on 368.4 million dollars in top line sales. Then you have Super Micro Computer, SMCI, surging 7.5 percent on a massive first quarter revenue outlook. They are guiding 14.5 billion to 15.5 billion dollars, blowing past the street consensus of 11.68 billion.

Grant Calloway

Over in Europe, Vestas Wind Systems is soaring 18 percent in morning trade after more than doubling its second quarter EBIT to 446 million euros. Meanwhile, on the cross asset desk, 10 year Treasury yields are sitting flat at 4.68 percent. Brent crude is softening after the International Energy Agency slashed its global oil demand forecast, and that drop in crude is dragging Texas Pacific Land, TPL, down 6 percent in early action.

Grant Calloway

So how do we interpret this wholesale number? The, the bull case here is pretty straightforward. Zero price growth at the producer level means the pipeline inflation pressure has dried up. The bulls say this gives the Federal Reserve all the cover it needs to start cutting interest rates aggressively. Lower input costs for businesses, lower borrowing costs on the horizon, soft landing achieved. Everything looks like roses, right?

Grant Calloway

Well, hold on a second. The bear side of this desk sees a very different picture in that 0.7 percent drop in goods. If goods prices are falling that fast, it means corporate pricing power is evaporating. Companies cannot pass costs along anymore because the end consumer is tapped out. When you lose pricing power while wage costs remain sticky, your margins get squeezed from both ends. That is not monetary triumph, folks. That is margin compression heading straight for corporate earnings statements.

Grant Calloway

It reminds me of a, a lesson from my specialist days on the NYSE floor back in the nineties. Traders would see an engine temperature gauge drop and start cheering that the car was cooling off. But if the gauge drops because the engine oil just leaked out onto the pavement, you are not cooling off, you are about to stall out on the highway. You have to know the difference between a cooling engine and a dying motor before you double down on the position.

Grant Calloway

Quick note before we look at the rest of the calendar. Today's episode is brought to you by Jellypod. If you want smart, concise morning market audio summaries delivered straight to your device, check out jellypod.com to stay ahead of the bell every single trading day.

Grant Calloway

Looking at what is on deck for the rest of this session. At 8:30 AM Eastern, alongside that PPI number, we get the weekly jobless claims report. Prior reading was 199K, forecast at 202K, with continuing claims expected around 1.8 million. We also have key pre market management calls kicking off right now that will set the trading floor tone before the 9:30 AM opening bell.

Grant Calloway

My old floor aphorism for today: never confuse a quiet tape with a safe tape. Tomorrow we get retail sales data, which will tell us if the consumer is actually holding up their end of the bargain. Keep your stops tight and your eyes on the order flow. This podcast is for educational purposes only and is not investment advice.