After the statements of support for the economy from China yesterday, we saw an upward move in the stock markets along with the commodity prices. Meanwhile, Bitcoin continued to hold above $30,000 while testing $31,000 again.
Although the positive news from China and Europe gave the markets some respite, the uncertainty about the inflation data caused investors to focus on tomorrow's data.
In its latest investor note, Fundstrat shared its expectations regarding inflation and the US stock market and made the first call to buy for a 2% rise in the S&P 500.
In the report, written by Tom Lee from Fundstrat, it was stated that the inflation data to be announced on Wednesday will be positive for the markets and will strengthen the story that inflation continues to slow down.
In the report, it was stated that the low inflation expectation stemmed from the decline in used vehicle prices and seasonal factors related to the core CPI. It was also stated that 42% of the goods taken into account in the inflation calculation were during deflation.
The fact that inflation is below expectations will have a positive effect on stock markets and Bitcoin, as it will reduce the expectation that the FED will continue to increase interest rates.
“We don't usually make these kinds of buy calls, but we think the timing makes sense given the jobs reports and the softness of the markets.
Investors gravitate towards a hawkish Fed. The market expects the rate hikes to continue and remain high for a while. If the CPI data to be announced this week is low, it would be logical to take a tactical position again.
If our expectation is correct, the general view in the market will change rapidly and the situation will reverse. And this will throw away the thesis that the recent rises are a bear rally.”