Core PCE eased further in December: ‘I’m still cautious’ on stocks

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S&P 500 opened down on Friday after the U.S. Bureau of Economic Analysis said the core personal consumption expenditures price index continued to ease in December.

Liz Young is still keeping cautious on equities

On a year-over-year basis, the Fed’s preferred inflation gauge was up 4.4% – in line with the economists’ forecast and down from 4.7% in November.

Still, Liz Young – the Head of Investment Strategy at “SoFi” is sticking to her cautious stance on the equities market. Speaking with CNBC’s Joe Kernen this morning, she said:

There are some bright spots in economic data, but the number of companies beating is below all of the longer-term averages. So, earnings aren’t impressive, considering we’ve already revised them down. So, I’m still cautious.

For the month, the core PCE came in up 0.3% – also in line with estimates.

Long-term investors can start testing the waters

At 18 times forward earnings, Young dubs the benchmark index a bit too “exuberant”.

But she also finds now as a suitable time to selectively shop for growth stocks as long as you’re a long-term investor. On CNBC’s “Squawk Box”, Young said:

A lot of the high growth names are down a lot. Things like software and cybersecurity. So, you could enter now you have to enter knowing there’s a higher probability that things likely will get worse again before they get better.

Also on Friday, spending was reported down 0.2% for December (adjusted for inflation) versus a 0.1% decline expected, adding to the narrative that the U.S. economy is headed for a recession in 2023. S&P 500 is up 6.0% for the year at writing.

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