Credit Suisse believes that the Federal Reserve will stop raising interest rates earlier than most people do due to declining inflation.
The beginning of a powerful market breakout is predicted by the organization’s top U.S. stock strategist.
According to Jonathan Golub on Monday, “This is actually what is being priced into the market generally.” “When we visit the gas station, everyone notices that the price of gasoline and oil has decreased. Even with groceries, we sense it. As a result, the figures already reflect that, and that’s a really major potential advantage.
According to Jonathan Golub, “This is actually what is being priced into the market generally” on Monday. “When we visit the gas station, every one of us notices that the cost of fuel and oil has decreased. Even with food, we notice it. As a result, the numbers actually reflect it already. And that’s a really significant potential benefit.
Golub claims the “fall” in inflation will take place over the next 12 to 18 months in a new note that anticipates this week’s release of the August CPI and PPI statistics.
Futures indicate that by the end of 2023, the price of food and energy will have reduced by 5.7% and 11.8%, respectively, while the inflation rate for goods has dropped from 12.3% to 7.0% since February. Rent and services have increased less over the past year than the Headline CPI (5.5% and 5.8% vs. 8.5%), respectively.
Golub asserts that the Fed will cease raising rates if there are indications of a collapse in inflation. In the upcoming four to six months, he said.
The market anticipates them to either pause or declare that they might pause in the first quarter if we continue on this glide path of things renormalizing.The stock market wants to move ahead of them if they do that. The stock market will soar to new heights.
Additionally, this could be a smart time to look for opportunities. Golub particularly likes consumer goods, industrials, integrated oil producers, and refiners.
He went on to say that the market’s valuations are currently in the middle of fair and affordable, suggesting that there is more upside from p/e multiples.
Golub anticipates that the S&P 500 will finish the year at 4,300, up about 5% from Monday’s close. The index has risen by nearly 8% in the past two months. But the S&P is still down by about 15% from its top.