Two Inflation Charts You Can't Ignore

Inflation isn't cooling. It's reloading.

The headlines focus on CPI. The smarter read is PPI. Producer prices are the leading indicator. What manufacturers pay today, consumers pay tomorrow. Right now, PPI sits at 6%. The trajectory points toward 10%.

That's not a forecast pulled from thin air. It's where the inputs are pointing.

Three Pressures Building at Once

Energy shocks aren't transitory. Supply constraints from geopolitical conflict keep a floor under oil prices. Every time the market prices in relief, another disruption hits.

Food prices tell the same story. Fertilizer costs, shipping disruptions, weather events. The inputs to food production are expensive. That cost flows downstream.

Geopolitical risk is the multiplier. It doesn't create inflation directly. It removes the safety valves. Trade reroutes. Supply chains lengthen. Prices adjust upward and stay there.

What PPI at 10% Has Meant Historically

Look at the 1970s. PPI ran hot for years before CPI fully reflected it. The stock market didn't wait for CPI to catch up. Equities repriced as margins compressed and rate expectations climbed.

The pattern is consistent. When producer inflation runs above 8-10%, equity markets face significant multiple compression unless valuations are already depressed. Right now, valuations are not depressed by historical standards.

That's the tension. Hot inflation plus stretched valuations is a combination the market has rarely navigated without pain.

The Valuation Problem

Inflation alone doesn't kill bull markets. Inflation combined with high starting valuations does.

When PPI spiked in 2021-2022, the S&P was trading at elevated forward P/E multiples. The drawdown that followed wasn't a coincidence. Rates rose, discount rates rose, and multiples contracted.

If PPI reaches 10%, the Fed's options narrow fast. Cut rates and inflation accelerates. Hold rates and growth slows. Neither path is clean for equities priced for perfection.

What This Means for Traders

• **PPI is the leading signal.** Don't wait for CPI confirmation. By the time CPI reflects 10% producer inflation, the repricing in equities is already happening.
• **Valuation matters more in inflationary regimes.** High-multiple growth names are most exposed. Cheap, cash-generating businesses with pricing power hold up better.
• **ChartOdds earnings beat data becomes critical here.** Companies that consistently beat on margins during inflationary periods are the ones worth owning. The track record is in the numbers.