Citi says investors have up to six weeks to keep squeezing bears after the inflation shock

Well, that’s one thing.

Inflation came in slightly below forecasts, then rocketed out — the best one-day percentage gain for the S&P 500 SPX,
+0.92%
since April 6, 2020, and the best one-day percentage gain for the Nasdaq Composite since March 24, 2020.

If inflation has actually peaked, there are really only two questions – how fast will inflation go down, and will the Fed hikes designed to tame high prices drag the economy into a recession. “The CPI peak is in,” said Warren Pies, founder of 3Fourteen Research, on Twitter. “The question is whether data is cooling faster than income is declining.”

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

The bank put together a chart of all CPI downside surprises since 2008, showing that typically, the equity market tends to rally for the following 60 days.

The market tends to rise after the surprise CPI lower.

Citi

“All this does not mean that we consider equities suddenly in a bull market again. [Earnings per share] is the main risk in the first half of 2023, but during the next 2-6 weeks, the market could be very painful for the bears,” he said.

Citi, it should be said, has been recommending investors short the S&P 500, so they missed out on Thursday’s fun, although the team said the put recommendation was bought at a low enough price to remain somewhat profitable. They say that the model shows that many shorts started at 3760, meaning that this position is now underwater.

Fahy and the Citi team also advise going long US Treasurys TMUBMUSD10Y,
3.819%
and shorting the dollar vs the Norwegian kroner USDNOK,
-1.60%.
The Australian dollar, the New Zealand dollar, the British pound and the Swedish krona have also tended to rise when the S&P 500 rose and the yield on the 10-year Treasury fell.

market

The rally seems to have legs, and US stock futures ES00,
+0.97%

NQ00,
+1.75%
higher. Crude oil futures CL.1,
+2.76%
rise as China takes steps to relax its zero-COVID rules. Dollar DXY,
-1.65%
it is sharply lower vs. competitors. Follow the MarketWatch live blog.

Buzz

China said that reduce the amount of time passengers will be required to undergo quarantine under the relaxation of strict zero-COVID rules. However, in Beijing, parks are closed as officials respond to a wave of COVID-19 cases.

this Veterans Day, so no economic output from the government, although the University of Michigan’s consumer sentiment report for November is due at 10 am Eastern. Holidays also mean a break in the earnings release calendar.

Still no calls were made in control of the House or Senate. The New York Times says there is 222 districts where Republicans won or led, which is more than 218 needed for House control. In the Senate, there are indications that Democrats will take both Arizona and Nevada, which will mean the Georgia runoff will not determine control of the upper chamber.

FTX bowed to the inevitable and said it was filing for bankruptcy protection. Cryptocurrency lender BlockFi said it is pausing the withdrawal in the wake of the turmoil in FTX, which has provided BlockFi with a $400 million credit facility.

Tesla TSLA,
+2.75%
CEO Elon Musk was appointed in specter of bankruptcy for Twitterthe social media service he bought for $44 billion.

JPMorgan continues coverage on Intel INTC,
+2.25%
with an underweight rating and a price target of $32, as the broker said it will take several years before Intel can regain technology leadership.

The White House said President Joe Biden will announce on the 27thTh The United Nations Climate Conference that the US The Environmental Protection Agency is strengthening the agency’s proposed standards to reduce 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 mourning period for the death of Queen Elizabeth II. The European Union is forecasting two quarters of negative growth, meeting the technical definition of a recession.

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Top tickers

Here are the most active stock market tickers as of 6 am Eastern.

Ticker

Security name

TSLA,
+2.75%

Tesla

GM,
+4.90%

GameStop

AMC,
+17.46%

AMC Entertainment

NIO,
+11.80%

Neo

AAPL,
+1.93%

apples

AMZN,
+4.31%

Amazon.com

Mulan,
-6.39%

Mullen Automotive

META,
+1.03%

Platform Meta

BBBY,
+1.80%

Bed Bath & Beyond

APE,
+15.00%

AMC Entertainment preferred

chart

CFPB

The Consumer Financial Protection Bureau on Thursday released this chart, showing that complaints about crypto services tend to move in line with the price of bitcoin. Fraud is the most frequent complaintwith romance scams among the most popular methods, also called “pig butchering,” where fraudsters pose as financial success and spend time gaining the trust and confidence of the victim.

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