Inflation 'collapse' will launch powerful market rally, Credit Suisse predicts

Credit Suisse expects the Federal Reserve to intermission involvement complaint hikes sooner than wide expected owed to tumbling inflation.

According to the firm's main U.S. equity strategist, it volition motorboat a almighty marketplace breakout.

"This is really what's being priced into the marketplace broadly," Jonathan Golub told CNBC's "Fast Money" connected Monday. "Every 1 of america sees erstwhile we spell to the state presumption that the terms of gasoline is down, and lipid is down. We spot it adjacent with food. So, it truly is showing up successful the information already. And, that's a truly large imaginable positive."

In a caller enactment previewing this week's August CPI and PPI data, Golub contends the ostentation "collapse" volition hap implicit the adjacent 12 to 18 months.

"Futures bespeak that Food and Energy prices should autumn -5.7% and -11.8% by twelvemonth extremity 2023, portion Goods ostentation has declined from 12.3% to 7.0% since February," helium wrote. "Over the past year, Services and Rents are up little than Headline CPI (5.5% and 5.8% vs. 8.5%)."

Golub expects signs ostentation is breaking down volition unit the Fed to halt hiking rates. His clip frame: Over the adjacent 4 to six months.

"The marketplace believes that travel the archetypal quarter, if we proceed to spell connected this glide way wherever things renormalize, that they're going to either intermission oregon awesome that they mightiness pause," helium said. "If they bash that the banal marketplace wants to determination up of it. The banal marketplace is truly going to instrumentality off."

And, present whitethorn beryllium a strategic clip to look for opportunities. Golub peculiarly likes consumer goods, industrials, refiners and integrated lipid producers.

"Valuations connected the marketplace are determination betwixt just and inexpensive close now, meaning there's much upside from p/e [price to earnings] multiples," helium added.

Golub's S&P 500 year-end target is 4,300, which implies astir a 5% summation from Monday's close. The scale is up astir 8% implicit the past 2 months. However, the S&P is inactive disconnected astir 15% from its grounds high.

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