Sage Investment Club

Says…JPMorgan. Seems very specific.Full ArticleBased on consensus estimates, the market current expects headline inflation to come in at 6.5% year-over-year, and for core inflation to be 5.7% year-over-year. On a month-over-month basis, headline and core inflation are expected to be -0.1% and 0.3%, respectively. The most likely scenario with a 65% chance of happening, according to JPMorgan, is the December CPI report revealing headline inflation of between 6.4% and 6.6%, year-over-year. In that scenario, JPMorgan expects a bullish move from the S&P 500 with a gain of between 1.5% and 2%. “This is a bullish outcome and think this outcome produces a decline in vol asset classes, finds support from both bonds and the US dollar,” JPMorgan said. The bank added that any initial surge higher in the S&P 500 is likely to be faded throughout the day.The next most likely scenario with a 20% chance of happening is the CPI report printing headline inflation below 6.4%. That scenario would signal to investors that inflation is decidedly moving in the right direction, and JPMorgan expects a S&P 500 bounce of between 3% and 3.5%. The gains could get even larger if the CPI print is below 6.2%, as it would trigger a tail event with increased volatility.Increased market volatility stemming from CPI reports is nothing new to investors. Multiple CPI reports over the past year have sparked big upside and downside moves in stock prices as investors attempt to gauge whether more rate hikes from the Fed are likely.

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