LIVE MARKETS-"Stay nimble": CPI could spark stocks rotation
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"STAY NIMBLE": CPI COULD SPARK STOCKS ROTATION
Markets are entering a pivotal week with Tuesday's U.S. consumer inflation data for July set to shape expectations for Fed rate cuts and possibly fuel a shift in market leadership.
According to Morgan Stanley strategist Mike Wilson, a softer-than-expected CPI print could reinforce bets around a September rate cut even further and spark a more sustained rotation into small caps and lower-quality stocks.
On the other hand, hotter-than-expected inflation likely means defensive and quality leadership and delayed policy easing.
"We think it makes sense for equity investors to stay nimble around this week's CPI report as a leadership shift under the surface of the market could take hold," he writes.
Looking ahead, Wilson maintains a bullish 6–12 month view for U.S. equities, citing rebounding earnings and cash flows dynamics as key drivers.
AI adoption, a weaker dollar and easier comparisons also add to the bull case. Tariff-induced inflation is expected to fade in the fourth quarter, paving the way for a rate-cutting cycle.
(Danilo Masoni)
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