Market Call: Winning Streak For The Bulls

We expect that the Santa Claus rally in stock prices that started on October 27 will continue over the rest of this year. It should be driven by the realization that inflation can and is moderating without a recession. That can only happen if productivity growth is making a comeback as we expect. China's economic woes are also an important source of "immaculate disinflation" for the US.

The 10.7% rally in the S&P 500 since October 27 has been spectacular (chart). The index is just 0.6% below this year's high on July 31. It is up 18.7% ytd, and a whopping 27.5% since October 12, 2022. It is only 4.9% below the record high on January 3, 2022.