Original title: most of Wall Street says that US inflation is tricky, and US stocks may face turmoil this summer!
Orlando (Phil Orlando), chief market strategist at Herm è s investment management firm (Federated Hermes), has long been bullish on U. S. stocks. But he is now worried that the market will face huge risks this summer.
He believes that US inflation may be trickier than the Fed expected. He warned that this could scare Wall Street and lead investors to face a volatile stock market this summer.
Orlando said in an interview on Friday that inflation in the United States will continue to rise. This will cause some problems. For example, will the Fed make policy changes at meetings of the Federal Open Market Committee or Jackson Hole?
Orlando points to the sharp rise in labour costs over the past two months, commodity costs and consumers' willingness to spend more as reasons for vigilance. Inflation in the US is rising, perhaps more aggressively than the Fed expected.
Orlando said the Fed and its chairman, Colin Powell, could withdraw from temporary inflation by the end of the summer and pave the way for a faster-than-expected tapering of quantitative easing. Orlando believes that this is a potential risk for the market, that is, inflation leads to a rise in interest rates, which will affect the discount rate on stock valuations.
Orlando also believes that the uncertainty of taxes has unnerved investors this summer. All these problems will come together to some extent and may be a wake-up call for the market between late July and early August.
But Orlando still believes that his view of the stock market is constructive. "We think GDP growth in the second quarter will be very strong, reaching 9.2%," he said. And, although the company's earnings grew by 48% in the first quarter, we think earnings will grow by about 60% or 70% in the second quarter. Therefore, the number in front of us is remarkable. "
Orlando, which has $625 billion under management, believesS & P 500The index will remain high this year. He's right.S & P 500The index is expected to end the year at 4500, still 6 per cent higher than Friday's closing price.
(daily chart of the S & P 500 Index)