Need to Know: Two pieces of good news for investors and three moves to make now in the wake of surging CPI, from UBS

by | Jul 14, 2022 | Stock Market

While stocks didn’t completely roll over following that ugly consumer price index print, futures indicate they may take another whack at it on Thursday. That’s thanks in part to a miss from JPMorgan, which is helping kick off earnings season. (Read more below).

How high will inflation reach and what lengths will the Federal Reserve go to combat it? Those are the questions without answers right now, though Wall Street has been busy taking a stab at them. Nomura is putting its money on a 100 basis-point hike at the Fed’s next meeting. “A significant part of our 2022 recession call involves entrenched inflation and a single-mandate Fed determined to bring it lower,” said a team led by Aichi Amemiya. Meanwhile, over at Jefferies, expectations are that the annual inflation peak has likely passed. They noted the bulk of the inflation upside surprise was due to housing costs “that should fade as seasonal factors come into play,” and energy prices that have already started easing up. Still, one question for investors is what to do now with that grim, though backward-looking, inflation number rattling cages. Our call of the day from global wealth management chief investment officer Mark Haefele and his team at UBS offers up a three-prong playbook. On the brighter side, Haefele said the market “is beginning to believe the Fed has the resolve to get on top of inflation, even if it continues to hit multidecade highs.” Market pricing, he noted, now points to an earlier end to the hiking cycle than before CPI data. And he pointed to a “clear sign” that the market is growing more confident in the Fed’s ability …

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