That could bring downward pressure to 48% of the consumer price index, and suggest that over 80% of the CPI is facing disinflationary pressures, Lee estimated.
"Our base case framework is that inflation will soon roll over hard over the summer," he wrote."The forward indicators argue a steep drop is coming.", prompting Fed officials to hike interest rates over 1,700% to tame high prices. That weighed heavily on stocks, with the S&P 500 slumping 20% last year.
Markets are expecting the Fed to raise interest rates another 25 basis-points at their next policy meeting, and officials have suggested rates could stay restrictive all year as high prices still remain a threat. Still, a pullback in inflation could ease pressure on firms and lead the central bank to dial back rates, which Lee previously said could jumpstart a new bull market for stocks.
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Stocks can 'hold up quite well' after an earnings recession, BMO saysFears of an earnings recession are overblown and investors shouldn't panic sell as stocks will hold up fine, BMO chief strategist says
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