00:00 Speaker A
We've been talking about trade, and some of these assets that are not really showing the effects of what's going on in trade. Now, tomorrow, we've got a CPI report, and the question remains, are we finally going to start to see more of the tariff effect being felt in those numbers?
00:19 Speaker B
Yeah, Julie. So the answer from economists would be yes, right? We're expected to see a little bit of a tick up in that Consumer Price Index for June. Economists expect that report to show prices increased 2.9% on a core basis, which would exclude food and energy. That's up from 2.8% seen in May. So a slight uptick there. But what's important here again, as we always talk about with markets, is sort of where expectations lie, right? That's consensus. Consensus is expecting prices to tick up a little bit. So, Citi's head of trading, Stuart Kaiser, pointed out, “Well, consensus is already expecting this pick up a little bit. It probably leads to no fed rate cut in June. But at this point, the market's only pricing a 7% chance of a Fed rate cut in, or sorry, Fed rate cut in July.” So at this point, that hasn't been some of the key things that's really backing this rally. So Kaiser sort of argues, “Well, maybe the rally can just continue, even if the data get a little worse from here, because the data are expected to get worse.” You can see this in something like Citi's economic surprise index, which takes a look at how data is coming in versus expectations. So you can see on your screen here, right as we got into July, data has started to beat expectations, meaning the market has started to understand that perhaps the data won't be as good. And so the data is starting to come in a little bit better than feared, I would put it. Not necessarily great, but again, better than feared. And so if the market is ready for that reaction, and things continue to come in in this slightly not as good expectation form, some strategists, like Kaiser, are arguing that maybe it won't be that big of a problem for stocks.
02:48 Speaker A
Well, and of course, Kaiser's not the only one who is bullish here, right? We, I mean, take your pick almost at this point. You're not, it's it's it's getting more and more difficult to find bears out there. And Josh, another example of someone raising their forecast is Lori Calvasina over at RBC, who did that in a note over the weekend.
03:19 Josh
Well, Julie, I'll I'll flip it on you a little bit though, right? So Lori's new target that she moved over at RBC is to 6,250. Take a look at where the S&P 500 is trading on your screen, right? She's saying it's gonna be flat over the next six months. And so essentially what she's saying is not that there won't be rallies, but she's projecting more chop. She pointed to the fact that momentum trade we've talked about a lot over the last month has started to slow down. So some of those high fliers are not necessarily leading the market higher. She pointed to, of course, the ongoing Trump tariff turmoil. That was something that Yardeni also pointed out. He felt like at this point, for his 6,500 target, we'd be past this Trump back and forth, and we're not. So I think really the feeling is, yes, maybe we get an end of year rally, but I'm not sure necessarily over the next month and a half on a tactical basis. Everyone's bullish right now. It seems to be a little bit of wait and see, at least until we start to figure out some of these headwinds and maybe get a little bit further into August.
04:58 Speaker A
Yeah, definitely. There is some consensus around that choppiness, uh, for example, even if some people are more bullish and bearish when all is said and done.
