<\/p>\n
Fundstrat Global Advisors managing partner Tom Lee thinks the U.S. Federal Reserve is done raising its benchmark interest rate.<\/p>\n
In a new interview with CNBC, Lee says<\/a>\u00a0that\u2019s he optimistic about the market and inflation numbers.<\/p>\n \u201cI think [last week\u2019s] CPI (consumer price index) report kind of shows that inflation\u2019s on a glide path lower. The things that are still inflationary \u2013 like auto insurance, motor vehicle repair \u2013 aren\u2019t things the Fed\u2019s necessarily trying to target with higher rates, but it\u2019s more of a supply-chain work-through.<\/em><\/p>\n So I think over the next three months, we could see core CPI at 0.2 or less. That would really allow the Fed to breathe easier, and that\u2019s why I think the last hike was July.\u201d<\/em><\/p>\n The Consumer Price Index (CPI) is typically used as a proxy to track inflation rates. Traders keep a close eye on the metric as it could potentially signal whether the Fed would continue to raise interest rates.<\/p>\n Last week\u2019s CPI report<\/a> indicated consumer prices rose 0.2% in July, which the White House described<\/a> as \u201cat market expectations.\u201d<\/p>\n Lee, however, notes that many stock market traders do not share his optimism.<\/p>\n \u201cI don\u2019t think people are even that bullish. I mean this week everyone\u2019s been quick to turn bearish. One just has to look at the comments from a lot of folks and they\u2019re already back in the hard landing camp\u2026 <\/em><\/p>\n Yet we know investors pulled $115 billion out of the stock market this year and there\u2019s $500 trillion in cash, and mortgage rates could drop pretty dramatically. If the Fed is done and the [US 10-year treasury note] stays at [4%], mortgages should drop to 5.5%. That\u2019d be hugely stimulative next year.\u201d<\/em><\/p>\n