4:31 p.m. ET, August 10, 2022
Inflation soared quickly, but may take more time to cool off
From CNN Business' Paul R. La Monica
Customers leave a Walmart store on August 4 in Rohnert Park, California.
(Justin Sullivan/Getty Images)
The market is cheering the fact that the
rate of consumer price increases edged lower in July. But one market expert said investors need to be patient.
"Inflation went up like an elevator but it will go down like an escalator," Brian Belski, chief investment strategist with BMO Capital Markets, told CNN's Alison Kosik on "Markets Now" Wednesday.
Belski thinks inflation pressures will take time to ebb and that investors shouldn't expect prices to fall as quickly as they soared. That said, he is encouraged by the fact that commodity costs are starting to decline and supply chain issues are abating. That should reduce pressure on consumer prices.
And Belski told Kosik he thinks many investors still haven't factored that into their earnings forecasts. Even though stocks soared in July after a rotten first half of 2022, "People are still too bearish," Belksi said.
He thinks investors will be surprised by good news later this year — and that's a key reason why his year-end target for the
S&P 500 is 4,800, nearly 15% above current levels.
But the Federal Reserve still may need to keep aggressively raising rates, despite the slowdown in inflation. Dana Peterson, chief economist with The Conference Board, told Kosik that she thinks a three-quarters of a point rate hike is still likely in September.
What's more, Peterson is also predicting a recession in the next few months. The good news is that she thinks it will be shallow and short-lived. The worst economic numbers will be in the fourth quarter of this year and early 2023, Peterson said. But the downturn will likely only last a few quarters.