Citi says investors have up to six weeks to continue pushing the bears after the inflation surprise

If inflation has indeed peaked, there are really only two questions – how quickly will inflation fall, and will the Fed hikes designed to tame high prices drag the economy into a recession. “CPI peak is in,” declared Warren Pies, the founder of 3Fourteen Research, on Twitter. “The question is whether the data is cooling faster than earnings are weakening.”[ads1];

Strategists at Citi say the next few weeks could be quite pleasant. “In truth, it’s hard to find any bearish catalysts between now and December payrolls, CPI and the FOMC,” said a team led by Jamie Fahy.

The bank has put together a chart of all the downside surprises from the CPI since 2008, showing that the stock market usually tends to rise over the next 60 days.

“All of this doesn’t mean we think stocks are suddenly in a bull market again. [Earnings per share] is a major risk in the first half of 2023, but in the next 2-6 weeks the market may painfully squeeze after the bears, they say.

Citi, it should be said, had advised investors to short the S&P 500, so they missed out on Thursday’s fun, although the team says its sell recommendation was bought at a price cheap enough to still be somewhat profitable. They said their model suggests the bulk of the shorts were initiated at 3760, meaning those positions are now heavily underwater.

Fahy and the Citi team also recommend going long US Treasurys BX:TMUBMUSD10Y
and shorting the dollar vs. Norwegian kroner USDNOK.
The Australian dollar, New Zealand dollar, British pound and Swedish krona have also tended to rise as the S&P 500 rises and the yield on the 10-year Treasury falls.

The market

The rally appears to have legs, with US stock futures ES00

NQ00
higher. Crude oil futures CL
climbed as China took a step to loosen its zero-COVID rules. The dollar DXY
was significantly lower vs. rivals. Follow MarketWatch’s live blog.

The uproar

China said it is reducing the time passengers will be required to undergo quarantine in a relaxation of its strict zero-COVID rules. But in Beijing, parks were closed as officials responded to a wave of COVID-19 cases.

It’s Veterans Day, so there are no economic releases from the government, although the University of Michigan’s November consumer sentiment report is due at 10 a.m. Eastern. The holiday also means a break in the income release calendar.

There are still no inquiries to House or Senate control. The New York Times says there are 222 districts where Republicans won or are leading, which is more than the 218 needed for House control. In the Senate, there are indications that Democrats will take both Arizona and Nevada, meaning the Georgia runoff will not determine control of the upper chamber.

Tesla TSLA
CEO Elon Musk raised the specter of bankruptcy for Twitter, the social media service he bought for $44 billion.

JPMorgan resumed coverage on Intel INTC
with an underweight rating and a $32 price target, as the broker said it would take several years before Intel is able to regain technology leadership.

Cryptocurrency lender BlockFi said it halted withdrawals in the wake of the turmoil at FTX, which had granted BlockFi a $400 million credit facility. The Bahamas’ securities regulator froze the assets of FTX Digital Markets.

The White House said President Joe Biden will announce on the 27th^th United Nations Climate Change Conference that the US Environmental Protection Agency is strengthening the agency’s proposed standards to cut methane and other harmful air pollutants from the oil and natural gas industry

The UK economy weakened by 0.7% in the third quarter, although that was partly due to the period of mourning following the death of Queen Elizabeth II. The European Union forecast two quarters of negative growth, meeting the technical definition of recession.

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Top tickers

Here were the most active stock market markers from 06:00 Eastern.

The diagram

The Consumer Financial Protection Bureau released this chart on Thursday, which shows that complaints about crypto services tend to move in line with the price of bitcoin. Fraud is the most frequent complaint, with romance scams among the most popular methods, as well as so-called “pig-slaughtering”, where fraudsters pose as financial successes and spend time gaining the victim’s trust and confidence.

Random reading

In that difficult moment, the UN Secretary-General realizes that he is reading the wrong speech.

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