The economy has given enough reasons for investors to fret. With higher inflation and slower growth portending further trouble ahead, noted Apple, Inc. (NASDAQ: AAPL) analyst Gene Munster delved into how the economic picture will shape up in the near term.
Recession Fear Building Up: The C-suite is looking to trim management jobs for the first time in a few years, the Loup Funds Managing Partner said citing a recruiter working with Fortune 500 companies.
The analyst said he thinks fear is building among management teams about a potential slowdown.
"The anticipation of a recession is creating a real recession," Munster said.
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Litmus Test For Market Reaction: Previewing the U.S. consumer price inflation data for May due on Friday, the analyst said the core consumer price index number, which excludes volatile food and energy prices, is the key. He noted that the consensus estimate calls for a slowdown in the core CPI from 6.2% in April to 5.9% in May.
If core CPI comes in at 6.1% or less, the market could react positively, Munster said. On the contrary, if the metric exceeds 6.2%, in all likelihood, the market will retreat, he added.
A quickening in the pace of the core consumer price inflation would be a signal that the Fed's work is just beginning, the analyst said. This is an apparent suggestion that more aggressive rate increases could be in the pipeline.
The SPDR S&P 500 ETF Trust (NYSE: SPY) settled Thursday's session down 2.38% at $401.44, according to Benzinga Pro data.
