Lower-than-expected CPI data initially boosted the Nasdaq rebound, but this largely reflected a cooling of interest rate hike expectations that day, and did not indicate that the energy shock had been averted. If oil prices remain high, gasoline, transportation, and production costs could further push up long-term inflation (a potential double-dip inflation concern), potentially forcing central banks like the Federal Reserve to maintain high interest rates, thus substantially suppressing various overvalued investment assets (long-term discount potential).
On Monday, the S&P 500 energy sector rose approximately 3.2%, indicating that funds are rapidly flowing back into high-cash-flow, highly defensive energy and value stocks, confirming the logic that "value and high-cash-flow sectors are the preferred defensive picks in the market."
