High CPI is bad news.
Higher CPI (Consumer Price Index) numbers indicate higher inflation, which can be bad for the stock market for several reasons:
1. **Higher Interest Rates**: Central banks may raise interest rates to combat inflation. Higher interest rates increase borrowing costs for consumers and businesses, reducing spending and investment. This can lead to lower corporate profits and, consequently, lower stock prices.
2. **Reduced Purchasing Power**: Inflation erodes the purchasing power of consumers, leading to decreased consumption. For companies, this means potentially lower sales and earnings, which can negatively impact their stock prices.
3. **Increased Uncertainty**: High inflation introduces economic uncertainty, which can lead to increased market volatility and risk aversion among investors. This can cause investors to sell off stocks, leading to lower stock market values.
4. **Valuation Compression**: Inflation can lead to higher discount rates used in valuation models, which reduces the present value of future cash flows. This can make stocks appear less attractive compared to safer investments like bonds, leading to a sell-off in the stock market.
5. **Input Costs**: For companies, higher inflation often means higher input costs (e.g., materials, labor), which can squeeze profit margins if they cannot pass these costs onto consumers.
These factors combined can lead to a bearish outlook on the stock market when CPI numbers are higher than expected.
Also for its substitutes.
But... DCA is still the best strategy in the long run!
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Business InvestorOP : @Shootingstar
Shootingstar Business InvestorOP: Take the profits
Business InvestorOP Shootingstar: Diamond hands
Shootingstar Business InvestorOP: Dun lah bro this Biden he won't go quietly one. I have a feeling he will make history and people will errect a statue but the people won't errect
Business InvestorOP Shootingstar: My pnl says otherwise
Shootingstar Business InvestorOP: Ok lah it will take a meteor hitting earth to bring it to your cost price I think won't happen haha