(Bloomberg) -- US stocks are hovering near record highs, unfazed by the war with Iran, stubborn inflation and mounting questions over how Wall Street will finance the expanding AI buildout. But for investors looking for a scare this Halloween, some of the market’s most unsettling signals are hiding just beneath the surface.
From violent swings in semiconductor shares and ballooning AI-related debt, to a stock-bond hedge that’s lost some of its reliability, as well as a widening wealth divide, the charts occupying Wall Street’s attention paint a less comforting picture than the major indexes might suggest.
Bloomberg News asked nine financial professionals what charts spook them. Here’s what they shared:
We find concerning the consensus forecasts for slower inflation in 2027 given recent data on prices. The consensus forecast for PCE inflation in 2027 is 2.5% and the average of the top 10 forecasts is 3.1%. Similarly, the Fed’s September Summary of Economic Projections show a median forecast of 2.3% PCE inflation next year and no FOMC participant sees inflation above 2.6% in 2027.
Thus, even the most pessimistic forecasts don’t envisage inflation running higher than current rates next year. These projections, which for private economists are based on the hope that the impulse from tariffs will fade, and oil prices will decline on the cessation of hostilities, have little support in the data. The PPI report shows scary trends in pipeline manufacturing goods prices with, for example, core processed goods PPI prices surging 24.3% over the last year. This is beginning to look like 2021/22, and if these soaring pipeline prices feed into finished goods prices, this may give Fed policymakers nightmares.