By Senad Karaahmetovic

Ed Hyman from Evercore ISI believes the decades-high level of inflation may have reached its peak. Evidence, such as the lower-than-expected rise in AHEs during May, suggests that inflation likely reached its peak in May.

As the sales of lumber slow down, inventory is rising. Hyman also notes that lumber prices were cut by half.

Evercore ISI predicts that the core PCE will increase by +0.3% between May and June.

“Money growth has slowed from +27% y/y less than two years ago to +6%. The global growth rate is declining rapidly. And the Fed is tightening,” Hyman told clients in a note.

“The economy is slowing, but 2Q is coming in a touch stronger than we expected. April saw strong consumer spending and strong employment in May and Apr. EVRISI company surveys held at an elevated level this week, and unemployment claims remained low.”

Moreover, the analyst sees the S&P earnings surprising to the upside in Q2.

“However, in response to signs of economic strength this week, bond yields surged +20bp, which meant good news for the economy, bad news for the stock market. The consensus is that the economy is indeed strong now, but that it will enter recession fairly soon,” Hyman concluded.