• Audio
  • Live tv
  • About Us
  • Contact Us
  • Privacy Policy
  • Terms of Service
Friday, September 29, 2023
Morning News
No Result
View All Result
  • Login
  • Home
  • News
    • Local
    • National
    • World
  • Markets
  • Economy
  • Crypto
  • Real Estate
  • Sports
  • Entertainment
  • Health
  • Tech
    • Automotive
    • Business
    • Computer Sciences
    • Consumer & Gadgets
    • Electronics & Semiconductors
    • Energy & Green Tech
    • Engineering
    • Hi Tech & Innovation
    • Machine learning & AI
    • Security
    • Hardware
    • Internet
    • Robotics
    • Software
    • Telecom
  • Lifestyle
    • Fashion
    • Travel
    • Canadian immigration
  • App
    • audio
    • live tv
  • Home
  • News
    • Local
    • National
    • World
  • Markets
  • Economy
  • Crypto
  • Real Estate
  • Sports
  • Entertainment
  • Health
  • Tech
    • Automotive
    • Business
    • Computer Sciences
    • Consumer & Gadgets
    • Electronics & Semiconductors
    • Energy & Green Tech
    • Engineering
    • Hi Tech & Innovation
    • Machine learning & AI
    • Security
    • Hardware
    • Internet
    • Robotics
    • Software
    • Telecom
  • Lifestyle
    • Fashion
    • Travel
    • Canadian immigration
  • App
    • audio
    • live tv
No Result
View All Result
Morning News
No Result
View All Result
Home Markets

U.S. stocks could rally another 25% now that Fed no longer has ‘back against the wall’ in inflation fight

author by author
November 11, 2022
in Markets
Reading Time: 4 mins read
0 0
A A
0
0
SHARES
10
VIEWS
Share on FacebookShare on TwitterLinkedinReddit

One of Wall Street’s most implacable bulls has laid out his argument for why he thinks U.S. stocks can continue to rally into the year’s end after Thursday’s game-changing October inflation data.

Tom Lee, head of research at Fundstrat, said in a note to clients dated Friday that while the “inflationistas” doubt that October’s softer-than-expected inflation reading can be repeated, Fundstrat sees three reasons the latest inflation report may represent a turning point in the Federal Reserve’s battle to suppress price pressures.

See also: U.S. inflation has come off the boil, but it’s going to take a lot longer to cool down

Those reasons included a “meaningful slowing” in the consumer price index month over month, “‘bullwhip’ payback” in durable-goods inflation and the contraction in the cost of health insurance.

Lee explained his reasoning:

  • “Shelter finally showed a meaningful slowing in CPI MoM, as OER (owners equivalent rent, >23% of CPI basket) slowed to +0.6% (+0.7%/+0.8% Aug/Sept) and trending towards market reality of deflation in housing.”

  • “Durable goods finally showing “bullwhip” payback as durables CPI fell to -0.7% MoM (-8.4% annualized) and even used cars finally showed some weakness down-2.4% for the month (but still 15% further to fall).”

  • “Medical health insurance massively flipped to -4% MoM from 12 consecutive months of +2.4% (since Oct 2021) and given annual adjustment is set to fall 40% over the next 12M.”

Those are signs that inflation is set to “massively slow” during the coming months, Lee said, adding that if all goes well, the U.S. economy could see “three to four months” of core CPI growing at a rate of 0.3% month over month.

The pace of the so-called core rate of inflation, which omits food and energy costs, slowed to 0.3% in October, lower than Wall Street expectations of a 0.5% increase.

The most important result of October’s inflation data is that the Fed no longer has its “back to the wall,” which could allow a more substantial easing of the pace of interest-rate hikes, Lee said. Ultimately, he noted, “the case for a pause after December is stronger.”

Market analysts have been on the lookout for signs that the Fed could either pause its aggressive interest rate hikes or perhaps even move toward cutting interest-rates, because it’s widely believed on Wall Street that this would help end the bear markets in both stocks and bonds this year.

The Fed has raised the fed-funds rate, a key Wall Street benchmark rate, by 3.75 percentage points since the start of the year, including four consecutive “jumbo” hikes of 75 basis points, including one earlier this month.

Even if the Fed does keep the rate above 5% for now, the shift from “higher in a hurry” to “predictable but possibly longer” would be more amenable to equity valuations, Lee said.

Fed-funds rate traders expect the rate to peak at 5% in March and remain there until at least the fourth quarter of 2023, according to the CME’s FedWatch tool.

Softening inflation could also help stocks by averting a deep recession and raising the chances that the Fed can guide the U.S. economy toward a “soft landing,” Lee said.

Lee and his team said this latest rally could last as long as 50 days and help the S&P 500 rally as much as 25% higher as investors embrace the notion that the worst of the Fed’s rate hikes are over and that the central bank will likely “pause” those hikes early next year.

Ultimately, the S&P 500 should be able to surpass its 200-day moving average of around 4,100. If investors receive another soft CPI report in December, the large-cap index might even reach the 4,400-4,500 range.


FUNDSTRAT

Sometimes described as a “permabull,” Lee stood by his bullish outlook for stocks during most of the first half of 2022 but admitted in March that he had been “too bullish” as he continued to press his case for why equity valuations looked attractive.

U.S. equity indexes saw their best session in more than two years on Thursday as the S&P 500
SPX,
+0.67%
rallied more than 5.5%, the Nasdaq
COMP,
+53.51%
climbed nearly 7.4% and the Dow Jones Industrial Average
DJIA,
-0.04%
advanced more than 1,200 points. Stocks look set to open higher and add to these gains on Friday.

Tags: article_normalBasic Materials/ResourcesChemicalsCommodity/Financial Market NewsContent TypesEconomic NewsEconomic Performance/IndicatorsEquity MarketsInflation Figures/Price IndicesN/A
Previous Post

Senegal roll the dice by naming injured Sadio Mane in World Cup squad

Next Post

Bitcoin price briefly slips to 2-year low after FTX’s announcement of Chapter 11 bankruptcy filing

Related Posts

Markets

‘This is a no-rules market’. Goldman strategist explains why recent stock moves have confounded traders.

September 29, 2023
14
Markets

2-year Treasury yield ends at highest since March after Powell’s Jackson Hole speech

September 29, 2023
11
Next Post

Bitcoin price briefly slips to 2-year low after FTX's announcement of Chapter 11 bankruptcy filing

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

POPULAR TODAY

Economy

Why have frozen fruit and vegetable prices soared by almost 12% — but the cost of fresh produce has not?

by author
September 28, 2023
0
30

What’s going on with frozen fruit and vegetables?Food prices rose 0.2% on the month in July after remaining unchanged in...

A woman waits for a healthcare worker in a physician's office.

Stem Cell Therapy May Help Treat Multiple Sclerosis

September 29, 2023
16

Wildfire battles continue as heat, air quality alerts affect most of Canada

July 9, 2023
595

U.S. stocks end higher after Fed Chair Powell’s Jackson Hole remarks, S&P 500 snaps 3-week losing streak

September 28, 2023
15
cease-fire in Khartoum, Sudan

Sudan’s military says it has suspended its participation in talks with paramilitary rival

September 28, 2023
15

POPULAR NEWS

This chart went viral in response to news that credit-card debt hit $1 trillion

September 22, 2023
39
Jimmy Buffett

What to Know About Merkel Cell Carcinoma, the Cause of Jimmy Buffet’s Death

September 9, 2023
27
A person holding the drug Mounjaro.

Mounjaro Superior to Ozempic for Blood Sugar and Weight Loss, Study Finds

September 26, 2023
18
Sharon Osbourne

Sharon Osbourne Stopped Taking Ozempic Because She Lost Too Much Weight

September 28, 2023
17
A nurse puts a blood pressure cuff on a woman.

High Blood Pressure at 18 Puts You at Higher Risk for Heart Attack at Midlife

September 26, 2023
17

EDITOR'S PICK

Economy

Inflation likely gained pace in August, economists expect, reversing progress

by author
September 19, 2023
0
11

Economists are forecasting inflation reaccelerated to around four per cent last month, reversing previous progress made as gasoline prices push...

Read more

Intervention For Bam Margera Reportedly Turns Sour As Friends Attempt To Get Him Into Rehab

BC Transit unveils Pride bus in Victoria

Clapper app finds new users as TikTok uncertainty looms

Nova Scotia flood: Body of Brooklyn man, 52, recovered, human remains found

Morning News

Welcome to our Ads

Create ads focused on the objectives most important to your business Please contact us info@morns.ca

End Homelessness.

you can give to funds under our care to End Homelessness and to support a cause, a current event, a remembrance for a fundraising initiative.

Please Support Us

Recent Comments

    Most Comments

    Economy

    .Biden targets ‘surprise fees’ from airlines: ‘You should know the full cost of your ticket right when you’re comparison shopping’.

    September 27, 2022
    13
    Economy

    .Fed’s Mester says inflation is going to remain hard to predict.

    September 27, 2022
    11
    Economy

    .Congress faces Friday deadline for averting government shutdown, as senators grapple with Manchin’s permitting plan.

    September 27, 2022
    14
    Economy

    .Biden’s plan to cancel student loans will cost $400 billion, CBO estimates.

    September 27, 2022
    11
    Economy

    .Michigan Democratic lawmaker’s staff has become first U.S. congressional office to form union.

    September 27, 2022
    12
    Load More
    • Home
    • Audio
    • Live tv
    • About Us
    • Contact Us
    • Privacy Policy
    • Terms of Service

    © 2022 Morning News - morns.ca by morns.ca.

    No Result
    View All Result
    • Home
    • News
      • Local
      • National
      • World
    • Markets
    • Economy
    • Crypto
    • Real Estate
    • Sports
    • Entertainment
    • Health
    • Tech
      • Automotive
      • Business
      • Computer Sciences
      • Consumer & Gadgets
      • Electronics & Semiconductors
      • Energy & Green Tech
      • Engineering
      • Hi Tech & Innovation
      • Machine learning & AI
      • Security
      • Hardware
      • Internet
      • Robotics
      • Software
      • Telecom
    • Lifestyle
      • Fashion
      • Travel
      • Canadian immigration
    • App
      • audio
      • live tv
    • Login

    © 2022 Morning News - morns.ca by morns.ca.

    Welcome Back!

    Sign In with Facebook
    Sign In with Google
    Sign In with Linked In
    OR

    Login to your account below

    Forgotten Password?

    Retrieve your password

    Please enter your username or email address to reset your password.

    Log In