SPY - April CPI Preview: Hot Inflation Print To Remove The Fed Put

2024-05-13 08:00:00 ET

Summary

• The stock market has been rising since the weak April labor market report due to the expectations of the Fed cuts - that's the Fed Put.
• However, the April CPI report is likely to show that the core CPI inflation is running at well above the 3% annualized, which limits the Fed's ability to cut.
• Thus, the S&P 500 is facing an imminent shock as the hopes of the Fed Put evaporate.

The Fed Put

The recent economic data points out that the US recession could be near a recession. For example, the Michigan consumer sentiment indicator just had one of the largest drops ever, falling to 67 in May from 77 in April - that's nearly a 13% drop. Even though the official hard data is not recessionary yet - if it feels like a recession, it's probably a recession....

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