Happy Friday team. I’m Phil Rosen, reporting from New York. The Federal Reserve’s Wednesday rate hike was just the beginning of the world’s fight against inflation. A smattering of other central banks have followed suit, while some others took a different course. 

All these policy maneuvers, too, make for an increasingly uncertain market — unless you’re an analyst at one top Wall Street firm that says, pretty soon, it might be prime time to buy into stocks for a rally. 

Let’s break it down.

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1. The stock market is in a bottoming process, and that could mean indexes rally in early 2023 as the Fed readies a pivot, according to Stifel.

The investment firm forecasted that the S&P 500 will surge 17% by the first quarter of next year, as a Fed pause gives markets a boost after a persistent sell-off. Such a move by the central bank would be data-dependent, though, and Powell and co. would need to see real signs that their efforts are paying off. 

A persistent decline in inflation figures should be what they’re looking for to show that it’s time to pause rate hikes, the Stifel analysts noted. 

Stifel still anticipates a recession in the third quarter of next year — but that’s not until after stocks make considerable gains. 

For now, pain fueled by central banks is likely to continue. The Fed’s 75 basis-point rate hike on Wednesday was the first of many such moves this week as the policymakers globally confront surging prices. 

Yesterday — which ING dubbed “Super Thursday” — nine other central banks adjusted key rates. 

The Bank of Japan, for example, kept its benchmark rate steady while stepping in to stabilize the volatile yen in other ways, but …read more

Source:: Business Insider


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