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CPI LIE, Fed Funds and Earnings and Recessions

Stock-Markets / Stock Market 2023 Jul 21, 2023 - 06:18 AM GMT

By: Nadeem_Walayat

Stock-Markets

CP LIE Tuesday

The smoke and mirrors annual inflation indices which mask the true magnitude of inflation pain that will run for the whole of this decade will Tuesday deliver a mix bag, a sharply lower headline rate falling towards 4%, whilst a stubbornly high core rate that will remain above 5% which is what the Fed is focused upon and thus likely to send yields higher. So the CPI should be a net bearish for stocks. Remember the Fed target is 2% not 5!


Fed Funds

Market rates are higher but the Fed tracker is now at a 77% probability for a pause.. Whilst my expectations are for another rate hike, what's uncertain is will that rate hike be this month or next month. A pause this month followed by a rate hike next month would chime with a rally into late July to target 4500 before the big sell off, which means the anticipated minor correction could fail to materialise, anyway it's going to be a close call and not done and dusted as what the Fed rate tracker implies.

Earnings and Recessions.

The Twitter bear mantra is that stocks cannot bottom whilst earnings are falling as illustrated by Morgan Stanley and their perma bear Mike WIlson.

Which prompted me to conduct a quick study to see if this consensus view is true as to when earnings bottom relative to stock prices -

1957 1 year later
1974 1 year later
1980 1 year later
1990 1 year later
2009 6 months later
2020 9 months later

Earnings bottomed AFTER stocks by typically 1 year! This illustrates why I don't pay attention to the views of others because all they usually tend to do is regurgitate inaccurate old wives tails .Someone at Morgan Stanley needs to turn that light switch on, better still fire all of their analysts and just become a patron for 5 bucks per month!

Whilst many are forecasting a recession based on old data what they fail to see is what's staring them in the face - THE STOCKS BULL NARKET! I am feeling richer, you are feeling richer, everyone invested in stocks is feeling richer and probably similar for home owners, and what do people do when they are feeling richer? SPEND MONEY! The stronger the bull market the more likelihood is that the US is heading for a soft landing.

This ARTICLE is an excerpt form my recent analysis on the current state of the stocks bull market as it FOMO'd to new highs Stock Market FOMO Maniacs Rug Pull Imminent? US House Prices Trend Current Statethat was was first made available to patrons who support my work, so for immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $5 per month. https://www.patreon.com/Nadeem_Walayat.

For Immediate first access to ahead of the curve analysis as my extensive analysis of the stock market illustrates (Stocks Bear Market Max PAIN - Trend Forecast Analysis to Dec 2023 - Part1), that continues on in the comments section of each posted article, all for just 5 bucks per month which is nothing, if you can't afford 5 bucks for month then what you doing reading this article, 5 bucks is nothing, if someone did what I am doing then I would gladly pay 5 bucks for it! Signup for 1 month for a taste of the depth of analysis that cannot be beat by those charging $100+ per month! I am too cheap! I am keeping my analysis accessible to all, those willing to learn because where investing is concerned the sooner one gets going the better as portfolios compound over time, $5 month is nothing for what you get access to so at least give it a try, read the comments, see the depth of analysis, you won't be sorry because i do do my best by my patrons, go the extra mile.

S&P

Targetting 4500 Mid Summer 2023.

And gain access to the following most recent analysis -

So for immediate first access to to all of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $5 per month. https://www.patreon.com/Nadeem_Walayat.

My Main Analysis Schedule:

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  • Global Housing / Investing Markets - 50%
  • US Dollar / British Pound Trend Forecasts - 0%
  • High Risk Stocks Update - Health / Biotech Focus - 0%
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Your trimming the FOMO rally analyst.

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2023 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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