A note from JP MOrgan with the transmission channel from stick inflation to higher for longer rates and thus a lid on the equity market.

  • “we stick to our long-held view that inflation will keep moderating, we worry that there is no cushion here anymore, most are fully on board with the view”

But ...

  • “At the same time, it is likely easier for inflation to move down from say 10% to 5%, but the move from 5% to 2% becomes incrementally harder”

On the implication for central banks:

  • "Central banks could stay higher for longer ..."

And thus equities:

  • " ... which would limit any prospect for multiple expansion, and the market would then need to solely rely on earnings growth for upside"

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And, more:

JPM say that there is

  • “a growing possibility that core PCE inflation could actually run above core CPI inflation for a time — reversing the historical gap between these two measures"

And this:

"We continue to look for the Fed to keep rates on hold into 2H24—barring an unexpected recession”

Powell sticks landing meme

Too early to celebrate.