The upcoming Consumer Price Index report for June, which will be released on Thursday, July 11, will be a "settlement" for investors who expect a second wave of inflation, according to FX168 Finance (North America). The Fundstrat's Tom Lee said in a video to clients this week that he expects the June CPI report to show a "sharp drop" in the inflation rate, which could lead to a rise in the stock market and increase the likelihood that the Fed will cut interest rates more than twice this year. Lee said, "This will be a settlement week, meaning a settlement of how people view inflation and the economic situation." Lee emphasized that recent conversations with the Fundstrat client group were mainly divided into three categories: investors who expect a second wave of inflation, investors who expect the Fed to cut interest rates due to economic weakness rather than moderate inflation, and investors who see increased risks of economic hard landing. Lee said, "But there is a fourth view, which is our view, not a commonly held view, that inflation is rapidly falling, so Fed interest rate cuts are good news for the stock market." Lee added, "I think if the data develops as we expect this week, it is very likely that more people will join this camp." Monthly CPI reports in December, April and May triggered a one-week stock market rebound because inflation showed signs of cooling faster than economists expected during these periods. Economists estimate that core CPI rose 0.21% on a month-to-month basis in June, but Lee believes that any reading below 0.25% will help boost stock prices.

According to Tom Lee of Fundstrat, the CPI report in June is expected to show a "sharp drop" in the inflation rate, which will cause the stock market to rise and increase the possibility of the Fed cutting interest rates more than twice this year. Lee said that it will be a settlement week, which means a settlement of how people view inflation and the economic situation. Lee emphasized that recent conversations with the Fundstrat client group were mainly divided into three categories: investors who expect a second wave of inflation, investors who expect the Fed to cut interest rates due to economic weakness rather than moderate inflation, and investors who see increased risks of economic hard landing. Lee said, "But there is a fourth view, which is our view, not a commonly held view, that inflation is rapidly falling, so Fed interest rate cuts are good news for the stock market."

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Lee emphasized that recent conversations with Fundstrat clients have mainly been divided into three categories: investors expecting a second wave of inflation, investors expecting the Fed to cut interest rates due to economic weakness rather than moderate inflation, and investors seeing an increase in the risk of an economic hard landing.

Lee said, "But there is a fourth view, which is our view and not a commonly held view, that inflation is rapidly declining and therefore a Fed rate cut is a good thing, which is good for the stock market."

Lee added, "I think if the data develops as we expect this week, it is very likely that more people will join this camp."

Monthly CPI reports in December, April and May triggered a one-week stock market rebound because inflation showed signs of cooling faster than economists expected during these periods.

Economists estimate that core CPI rose 0.21% on a month-to-month basis in June, but Lee believes that any reading below 0.25% will help boost stock prices.

Lee said, "Any value below 0.25% is positive," he believes that CPI readings between 0.20% and 0.25% will be lower over the past year, except for the 0.16% in May.

Lee said, "This can only prove that inflation is falling rapidly. I think the expected number of interest rate cuts will exceed two."

Lee said, "If the June CPI data is weak, I think the expected number of rate cuts will rise, which is good news for the stock market, so we hope to maintain our target and adhere to effective policies."

Lee believes that stocks related to agents such as artificial intelligence, weight loss drugs, the financial industry, Bitcoin and exchanges are effective. Lee is also bullish on small-cap stocks, which have significantly lagged behind the large-cap rally so far this year.

JPMorgan's trading department also expects that the CPI report for June will have a flat performance, which will boost stock prices.

The central bank said in a report on Tuesday that the most likely scenario is that core CPI rose 0.15% to 0.20% month-on-month, with a probability of 35%, which could drive stocks up 0.50% to 1%.

Andrew Tyler of JPMorgan said, "Many former Fed directors have stated that September is an appropriate time to cut interest rates. Considering this, we are still tactically bullish, but confidence has been slightly weakened."