Jim Poulsen, head of strategic investment at The Leuthold Group, said the Fed’s monetary tightening cycle is likely to be coming to an end as inflation has already peaked.
Inflation has reached its peak
Speaking to CNBC, Paulsen said he doesn’t even know if the Fed should do more anymore, and that the war on inflation has been won.
He added, “Historically, periods of peak inflation are known to be good times to buy in the stock market.”
Paulsen noted that the value of the S&P 500 is relatively low and investor sentiment is very pessimistic, which is often seen as bullish factors for the stock market.
“The pessimism flashing throughout the economy indicates that monetary tightening by the Federal Reserve has become too severe, that higher yields on bonds and lower commodity prices are becoming increasingly unsustainable.”
He continued: We may get a bad economic report or a good inflation report, but I think we are really close to the end of monetary tightening from the Fed, and I expect we will have a good year next year.
