The March CPI was reported at 3.5%, higher than expected on April 10. This development triggered a sharp decline in the stock market, with a total drop of 8.5% from the recent high.
Could this downward movement signal the onset of a major bear market, or is this sell-off simply a retracement, setting the stage for the bull market to resume?
We will explore this question by studying the following hypothesis:
• A rising CPI is a leading indicator of a bear market. • A declining CPI is a leading indicator of a bull market.
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