Wake Up Call - Screw the Core, Watch the Headline

The S&P 500 and NASDAQ Index futures are indicating a modestly higher open, while the Dow looks to start the day lower, possibly impacted by the details of General Eletric's (GE) earnings report. It looks like the market is still buying into the "core" figures in the PPI and CPI reports. We are pounding the table, so pay attention. People are starting to catch wind to the blowing we've been sending your way for months. With secular drivers pushing food and energy prices, the headline figure is important! To briefly retouch on the issues. Industrial growth in India and China have turned China into a net importer of grains, while ethanol production is adding a use to the demand picture for corn, impacting all surrogate grains, feed prices and the prices of proteins. Nothing impacts the American wallet more than food and energy, and it cannot be ignored. The Fed is not missing the picture, so you should pay attention as well.

Asia:
Hang Seng Index -0.19%; Shanghai/Shenzhen 300 -0.23%; NIKKEI 225 -1.01%; S&P/ASX 200 -0.36%; Taiwan TAIEX -0.9%; BSE SENSEX 30 +2.06%; KRX 100 -0.56%; Ho Chi Minh -1.42%

U.K., Europe & Middle East:
DJ STOXX 50 Index +0.73%; FTSE 100 +0.43%; CAC 40 +0.62%; DAX +0.63%; Russian RTS Index +1.59%; Tel Aviv 25 NA; Tadawul All Share NA; DFM General NA


Key Headlines:

• *** As Wall Street Greek has told you in the past, and we are pounding the table now, screw the Core PPI figure, and pay attention to the headline figure. Secular dynamics are in play driving energy and food prices higher, and they should not be written off as seasonal changes have been in the past. The headline Producer Price Index for March rose 1%, ahead of consensus expectations for an increase of 0.7%, but lower than February's 1.3% rise. Consensus compiled by Bloomberg.
• *** Oil prices are firming at current levels, and we tied it together for you yesterday. Refiners are increasing capacity usage to catch up with gasoline demand and stockpile drift, so with OPEC having tightened the supply, oil should now rise and at least hold this base, in our view. We turned bullish on oil again yesterday.
• *** Earnings season is underway, so don't miss the earnings report schedule, provided here by Yahoo!. General Electric reported earnings that were in line with expectations, while Samsung showed lower profits than a year ago.
  

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