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Core Inflation Hits 40-Year High; US Stocks Soar 1,500 Points?
Last night's US stock market exhibited a very peculiar trend chart, with a significant drop at the opening, but then it kept rising continuously. The Dow Jones Industrial Average surged by more than 1,500 points during the session.
What made it even more peculiar was that the US inflation data was not ideal, far worse than the market's expectations, yet the three major US stock indices all rose by more than 2%.
In response, the CEO of JPMorgan Chase warned the market that it would be difficult for the US economy to achieve a soft landing, and a recession would be hard to avoid.
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The CPI announced by the US last night showed a year-on-year increase of 8.2%, which, although slightly lower than the previous month, was higher than market expectations.
Additionally, excluding the two factors of energy and food, which have larger price fluctuations, the core price index rose by 6.6% year-on-year. This further increase in the value also set a 40-year record since 1982.
Since stock trends are often related to expectations, when the CPI is worse than expected, the stock market responds with a significant drop. This has already happened once when the CPI was announced last month, but it was unexpected that it did not repeat this time.
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Before the US stock market opened, the performance of the three major indices in the futures market did indeed show a significant drop. At that time, the Dow Jones Industrial Average even fell by more than 800 points, and the performance at the opening also followed the rule of a significant drop due to不理想 data, with all three indices opening down by 2%.
However, it was quite strange that the indices kept rebounding afterwards, even rising higher and higher, and in the end, all three indices closed with a significant increase, ending the previous six consecutive declines of the Nasdaq and S&P.After the release of the U.S. CPI data, the market forecast that the probability of the Federal Reserve raising interest rates by 75 basis points in November has further increased. However, unexpectedly, a new option has emerged, with nearly an 8% chance that the next rate hike will be by 100 basis points. This is not entirely unreasonable, after all, the previous rate hikes have consecutively reached 75 basis points for three times. But the U.S. inflation has remained above 8% for seven consecutive months, so further increasing the pace of rate hikes is also one of the options.
Moreover, for the U.S., the biggest trouble at present is that inflation seems to be spreading to other areas beyond food and energy. The high inflation in the U.S. was mainly due to the rise in energy prices, and the driving force behind food prices was the second, but now the impact of these two factors is slowing down.
In the latest data, the year-on-year growth in energy prices has fallen below 20%, which is a significant decrease from the 40% or so in the previous months. This is also due to the continuous decline in international crude oil prices since the third quarter.
But even so, the overall CPI is still high, and the core price index, excluding energy and food factors, has reached 6.6%. The higher the CPI rises, the more it indicates that the price increase of other goods and services outside these two factors has accelerated, and inflation is spreading.
It's no wonder that the CEO of JPMorgan Chase's confidence in the U.S. economy is getting worse and worse.He believes that under the current circumstances, it is already very difficult for the Federal Reserve to control inflation while ensuring that the economy does not fall into recession. The possibility of the United States entering a recession in the future has become very high, and the chance of a soft landing is extremely slim.
Just a couple of days ago, he also warned investors that the stock market will still decline in the future, and the S&P 500 may fall by 20% on the current basis.
However, some analysts believe that the CEO of JPMorgan Chase has been making intensive statements in recent days, reminding the market of the possibility of a recession, perhaps to lay the foundation for JPMorgan Chase's upcoming earnings report. If the performance data is poor at that time, it can be attributed to the poor overall environment.
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