BofA with the note. I will add that higher inventories meeting weakening demand is not a recipe for good profits.
Not everything is about the second derivative
Waning demand and pricing power plus continued wage pressure do not seem like reasons to celebrate. But Wednesday’s weaker CPI (note)(a mere 53bp drop) was met with applause–peak CPI! But 8.5%inflation is still extremely high, nowhere near long-run target inflation. Moreover, the stronger-than-expected jobs report was interpreted as a positive for a soft vs. hard landing and for consumer health. But labor is the most important and most negatively correlated inflation measure with S&P 500 margins–far more important than commodities or other input costs (Exhibit 2).
