As discussed yesterday, the US inflation read was seen by the markets as important. A fall in the number would lead to markets potentially regaining their footing. Before the report, economists had been betting that annual inflation would dip below 7% in the third quarter of this year on expectations that supply chains will get back in order and inflation will dent demand.
And of course Joe Biden had come out before the number was released saying “I want every American to know that I am taking inflation very seriously and it’s my top domestic priority,” “The first cause of inflation is a once-in-a-century pandemic. Not only did it shut down our global economy, it threw supply chains and demand completely out of whack… And this year we have a second cause: Mr. Putin’s war in Ukraine.”
But Americans got little respite from inflation in April, as prices for a range of necessities and discretionary-spending categories continued to climb at some of the fastest-ever rates. The Labor Department said Wednesday its consumer price index slowed to 0.3% last month from 1.2% previously, exceeding forecasts for a slowdown to a 0.2% rise. Consumer prices in April year-on-year slowed to 8.3% from 8.5%.
Grocery prices were up 10.8% over April 2021, with meat rising 13.9% and eggs up 22.6%.
That S&P bear market debate is raging nonetheless, with some strategists and observers saying the S&P 500 is growling just like one should. Wall Street banks like Morgan Stanley have been saying the market is getting close to that point.
But should the S&P 500 officially enter the bear’s lair, Bank of America strategists, led by Michael Hartnett, have calculated just how long the pain could last. Looking at a history of 19 bear markets over the past 140 years, they found the average price decline was 37.3% and the average duration about 289 days.
While “past performance is no guide to future performance,” Hartnett and the team say the current bear market would end Oct. 19 of this year, with the S&P 500 at 3,000 and the NASDAQ Composite at 10,000.
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