Bear Market May Have Hit Low: Josh Brown

Brown said “we’ll have to see about” the “higher for longer” idea, apparently a reference to the notion that the Federal Reserve will keep interest rates elevated to fight inflation.

“But if the economy really doesn’t melt down and we can tolerate these higher rates, then basically we’re left with this tug-of-war which is just-OK earnings growth or lack of earnings growth, possibly, and multiples that are not that low historically” relative to the past five years, Brown said.

A cooler-than-expected Producer Price Index report Tuesday confirmed market enthusiasm for last week’s Consumer Price Index release, which showed more moderate price increases in October than anticipated, Brown said. Meanwhile, the recent decline in the dollar from its high this year may signal to stock investors that the Federal Reserve could be nearing the end of its tightening cycle, he said.

Investors now anticipate the Fed will “take its foot off the brake a little bit” and raise the benchmark interest rate by 50 basis points in December, rather than the 75 basis points that had been widely anticipated before the most recent CPI report, Batnick noted.

The S&P 500 has to rally a little over 20% from its Tuesday level to reach a new high, Batnick said.