Lee advises buying stocks ahead of CPI report as disinflation boosts stock prices and Fed rate cut prospects rise

According to financial analyst Tom Lee from Fundstrat, investors should purchase stocks prior to the release of the April Consumer Price Index (CPI) report scheduled for next week. Lee believes that the current setup indicates a rise in stock prices as disinflation progresses. If the CPI report yields expected results or even exceeds expectations, it could increase the likelihood of the Federal Reserve reducing interest rates by three times this year, as per Lee’s assessment. Lee stated that the “buy in May” trend is still active as the S&P 500 has already gained almost 4% this month. In addition, Lee predicts that the upcoming CPI report will reveal signs of diminishing influence from high car insurance prices on consumer price indices. This, in turn, could lead to investors estimating more than two interest rate cuts from the Federal Reserve by the end of the year. Lee asserted that his optimistic short-term forecast is supported by a decrease in volatility index, US dollar, and long-term interest rates, as well as the commencement of interest rate cuts by other central banks, such as Sweden’s Riksbank. Furthermore, the Bank of England has hinted at imminent interest rate reductions. Lee concluded that investors should purchase stocks now, as this trend has been observed during earlier months, and incoming data is anticipated to display a general decline in crucial inflation indicators. The original article can be found on Business Insider.