This morning’s US cash open has shown traders a little bit of everything. During the first hour of trade, the DJIA was up over 150 points while the S&P 500 remained near flat. Currently, the early rally has subsided and both indices are moderately positive.

Equities Grind Higher-Wall Street Is Printing Money These Days!

We can debate any number of reasons for the rally all day long. Instead, let’s keep it simple: The combination of relaxed monetary policy and a chance that the Trump tax plan will become a reality are bringing bulls to the table.

More From The FED

Last Friday, US Federal Reserve chair Janet Yellen took the stage at the National Economists Club dinner. She cited the lack of inflation in the US economy as being a “surprise,” and that the reasons behind the recent soft inflationary metrics remain unclear.

Inflation talk is going to dominate headlines as we enter the fourth quarter of 2017. Today, the Chicago FED released its National Activity Index for September. It is an inflationary metric, and it came in positive at 0.17 – up considerably from the previous release.

Overview: I always question the value of arbitrary metrics such as today’s Chicago FED release. In my opinion, they are an abstract construct, far from a direct performance measure. But, the important thing to remember is that it is a FED metric. The decision makers watch these items very closely as do the markets.

Today’s bump in the Chicago NAI shows that inflation may be heading towards the FED’s 2% target. This type of information can be used to build a case for a December rate hike from the FED.