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Is April CPI sending signals to markets about any rate cuts?


The Consumer Price Index (CPI) data came out Wednesday morning, with the inflation reading coming in lower than expected for the month of April. Portfolio Wealth Advisors President and CIO Lee Munson joins Wealth! to provide his insights on the market outlook amid this print that points to cooling inflation.

Munson views the CPI print as positive for markets (^DJI, ^IXIC, ^GSPC), stating that “it suggests we might get some [interest rate] cuts” from the Federal Reserve. However, he notes that rate cuts are not expected to materialize until after the election, describing them as “delayed, it’s not completely off the table.”

If the Fed were to cut rates, Munson expects a broadening out in the market. He anticipates this move to extend beyond just large growth stocks with massive revenues, saying he expects to see “a very different dynamic” than what occurred in markets pre-COVID.

Regarding cooling inflation, Munson maintains that the labor market and wage growth continue to be an issue.

For more expert insight and the latest market action, click here to watch this full episode of Wealth!

This post was written by Angel Smith

Video Transcript

Well, more Americans are carrying a sour tone on the economy even as the pace of inflation weakens consumer price increases moderated somewhat in April rising 3/10 of a percent month over month as revealed by data from the Bureau of Labor Statistics.

So what does the latest inflation data mean for your investment portfolio?

For more on this?

Joined by a good friend of the show, Lee Munson portfolio, wealth advisor, president and chief investment officer.

Ok.

So what is the inflationary environment play for people’s portfolio out there?

Lee?

Well, let’s just note all this bad news and inflation.

The S and P 500 made an all time high today, right?

We’re almost at 5300.

So obviously this news today is good for the stock market, right?

Because it suggests that we might get some cuts if you look at uh fed fund’s future and look at the betting markets that bond market participants do.

We’re not really expecting a cut until later this year.

Most most of the statistics or the the the spread is all about after the election.

So we know that the inflation, you know, destroying inflation, it’s it’s just delayed, it’s not completely off the table and when the stock market price is six months forward, and I thought that’s what I think that everybody has to realize.

Nobody cares about what happened six months ago.

Nobody cares what happened 30 days ago.

I only care about one thing.

What I think the next 12 months of earnings are gonna be on the aggregate S and P and all the asset classes that I follow and all those are going up.

The only major asset class that I follow that’s gonna have declining earnings growth going into next year is the NASDAQ 100.

But the S and P is supposed to go, large value is supposed to go look at, it’s going to go from a negative PS to a positive eps over the next 12 to 18 months and all those stocks are…

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