© Reuters. US CPI hits hard tonight. JPMorgan Jr. Boldly Predicts: US Stocks Could Rise 10%
December 13 Financial Association News (Edited by Liu Rui)As of tonight 9:30 Beijing time, the most important data that has received more attention in the near future: November data from the United States will be released soon. Since these data are closely related to the Fed’s interest rate hike prospects, they have attracted a lot of investor attention.
JPMorgan Chase’s sales and trading department boldly predicted that as US equity investors have generally adopted a defensive stance, once CPI data released tonight is more moderate than expected, it is very likely to trigger a sharp rebound in stocks. US stocks. index It will increase up to 10%.
Tonight’s data could determine the near-term fate of US equities
For US equity investors, the US November CPI data report will be the last inflation report released this year and is likely to determine the direction of US equities in the coming month.
“CPI data has the potential to determine market direction and size ahead of mid-January earnings,” said JPMorgan’s Andrew Tyler. The report is neutral to mildly dovish.
At present, the market generally expects the CPI in November to be 7.3% year-on-year. And JPMorgan Taylor’s team said in the scenario analysis for the client to develop strategies,If US inflation hits 6.9% yoy or lower in November, it could push the S&P 500 8% to 10%。
If the gains were indeed that large, they would send the S&P 500 up well over 20% from its October lows, marking the technical end of the 12-month bear market.
While the probability of this happening is quite small – the JP Morgan team estimates the probability of this happening to be only 5%, it also reflects the general market view that November CPI data has a significant impact in determining the short-term fate of the market.
other possible scenarios
According to the JPMorgan team,The most likely scenario is that the US CPI rose between 7.2% and 7.4% year over year in November, which would send the S&P 500 up 2% to 3%.
At the same time, the JPMorgan Chase team also pointed out that if November’s CPI can decline from the previous month, it can also push the S&P 500 up 5.5% in a single day.
Taylor wrote in the report: “The rationale here is that inflation is not only fading, it is fading at an accelerating rate. This will boost people’s confidence in the forecast that overall inflation will fall to around 3% in 2023. Furthermore, if inflation drops to 3% next year, regardless of labor market conditions, the Fed seems unlikely to keep the final rate at 5%, and any move by the Fed would tear the stock market apart.”
On the other hand, if the annual CPI data for November is close to or above its previous value of 7.7%, it could cause US stocks to fall. According to JPMorgan’s analysis,If CPI exceeds 7.8% YoY in November, stock index could fall 5%。
