Real inflation has not fallen where I live. Gas is still absurd. Rents are still going up (my friend texted me two weeks ago that his rent increased 50%). Beef it still crazy expensive. And homes are still ridiculously and unafforably priced. This all needs to come down. IMO (which is worthless) the SPX will fall to 2,500 then ultimately bottom around 1,500 but it could take 1-2 years. These are big moves and big timeframes. Zoom out to a multi-decade SPX chart and you will see the unsustainable parabolic move above the 2007 highs. Even if you use a logarithmic chart there is only marginal support at 2,500 and no real support until 1,500. My two cents, which is all I have. Don't bet your life savings on it.
No, inflation is not rising, prices are rising at a reduced rate to a month ago. The "recession" can actually end up being basically meaningless beyond the correction that already occurred this year. This scenario seems to elude many traders but it's not without precedent.
Although I do agree that the market can keep going higher and what happened we can just call a correction, I just don't see how where we are now doesn't affect the economy is a very negative way. Interest rates are just beginning to hit people hard. I know lots who have mortgage payments go up $500-800. Where is that money coming from? It means they are going to be less of a consumer. Real Estate prices will I'm sure soften, although I'm hoping for a crash, but either way, this drop of the wealth effect should also have negative impact on the economy and people spending. The government is also not going to be as supportive, especially in Canada and this is what Cynthia Freeland directly said. Much of the spending was stimulus driven. For Canada, about the only bright spot is the huge immigration coming, but where these people will live nobody knows since developers are not pushing forward. I think the pain is honestly just beginning because lots of these things take time to work through the system. Unless rates drops just as quickly as they went up, which is doubtful, the economy has to adjust to these higher rates and that will be a shit show.
What I'm saying is the markets ex-IT have likely already priced in the "recession" next year. I see it in the earnings reports, the empty car lots with year long wait lists, the strong rental market. Incomes are going up. There may not even be much of a recession at all in Canada. If Americans think the US economy is going to hell then go ahead short QQQ; nasty surprise to the Calhoun types last week though they never saw it coming.
"The consumer price index increased 0.4% for the month and 7.7% from a year ago, both lower than estimates." Consumer prices rose 0.4% in October, less than expected, as inflation eases (cnbc.com) 4 key takeaways from the November CPI report (brookings.edu) ....
Read what was said. Inflation is the rate of change of prices, not the actual prices themselves. If you annualize 0.4% you get 4.8%. 4.8% is significantly lower then 8.1%. Again inflation is not rising, it is decreasing.
Keep in mind i said “ we will then hit a wall”. I think earnings will take more of a hit and analysts will then have to reduce eatimates a lot more. Keep in mind the fed still wants to raise rates to 4.75-5%. They will just do it slower. The market is underedtimating the feds resolve to raise rates.
Follow up : "Canada's annual inflation rate fell to 6.3% in December of 2022, the least ... On a monthly basis, the Canadian CPI declined by 0.6%, the most since April 2020." I also noted that inputs into US production fell 0.5% as well last month. For inflation to drop, we didn't actually need prices to drop. But they actually did last month.
You Canucks are fubar. You are, like the rest of the world, slave to Powell's words, plus we don't seem to want your stinking oil, thus the Keystone XL disaster. Canada is going to suffer a recession because Biden and Congress are morons. Biden- "We must save the environment! More green energy!" Biden - "Gas prices are too high! Big oil, pump more oil!" Biden - "I am cancelling all leases to drill on federal lands to save the fishes and the spotted owl! But big oil must pump more, because gas prices are too high!"