Markets haven't rested since last week's CPI print, and at least some on Wall Street seem to have tilted more bullish. The bears are still on the prowl, but today we're visiting their more optimistic counterparts.
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1. JPMorgan Asset Management's chief strategist sees upside ahead following Wednesday's inflation reading. The dip, according to David Kelly, suggests high prices are starting to roll over.
"I would be fully invested in equities at this point because I do think that equities can move higher here," he told Bloomberg on Friday.
Kelly expects to see another positive CPI report for August, with inflation showing improvement beyond what official data may suggest. Next month, Kelly anticipates a 50-basis-point rate hike from the Fed, and a 25-basis-point hike in November.
But given that the Fed has had to stomach frequent criticism for being behind the curve on inflation, Kelly said policymakers have remained wary about celebrating any fresh data, which means sentiment could stay weak.
"The problem is [the Fed has] been on a diet of humble pie all year," he said. "And that's what's causing them to be cautious in declaring any progress here."
Fundstrat's Tom Lee echoed a similar bullish sentiment on Friday. Wall Street, Lee said, is becoming more hawkish than the central bank — which gives him a bullish outlook for stocks.
The analyst pointed out that sell-side economists expect the Fed to continue hiking rates through 2023 to as high as 5%, well above Fed expectations.
But bearish Wall Street firms seem to be ignoring signals of falling inflation, he added. That leaves Lee aiming for a contrarian bet.
"We believe the S&P 500 will see a recovery similar to 1982 and thus recover YTD losses before year-end," Lee said.
In other news:
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9. Billionaire crypto founder Sam Bankman-Fried explained how investors can determine what makes a safe yield product. In his view, when a crypto platform advertises returns that are too good to be true, oftentimes they are. The FTX chief shared where he thinks the tech market will have exponential growth over the next decade.
10. Ethereum has rallied in a big way over the last month, soaring over 80% even amid the broader crypto winter. But some traders expect the token's rally to fizzle out as the upcoming proof-of-stake system will mark a "sell the news" event.
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