We are a day away from data that could prove a turning point for markets. If Wednesday’s CPI doesn’t reveal some slowing in prices, expectations will rise for a bigger Fed rate hike in September, possibly knocking stocks. But if it swings the other way, especially after surprisingly good jobs data, the view that things aren’t as bad as feared/Fed hikes may be done soon, could prevail.
Wall Street does seem to be at pains lately to advise treading carefully with optimism that has the S&P 500
set to break two-straight quarters of losses — up 9.3% in the third quarter so far. “The central challenge to the notion that there will be a more meaningful Fed pivot is that the near-term inflation picture is likely to remain uncomfortably high,” said Goldman Sachs strategists Dominic Wilson and Vicki Chang in a late Monday note. But amid the caution, there’s still plenty of stock buying recommendations out there from the sell side, that is the brokerages and investment banks. And that’s a fat red flag investors may want to heed, warns our call of the day from Citigroup. “Our index of global sell-side recommendations is back to peak bullishness levels reached in 2000 and 2007, after which global equities halved,” noted a team led by chief global equity strategist, Robert Buckland. “Analysts are net buyers of every sector in every region, but then …