Wall Street’s delusions persist because their “analysts” keep insisting they know the inner workings of Fed Chairman Jay Powell’s mind, and therefore their optimistic predictions of a return to a bull market are perfectly rational and justifiable.

Tom Lee, head of research at Fundstrat, said in a note to clients dated Friday that while the “inflationistas” doubt that October’s softer-than-expected inflation reading can be repeated, Fundstrat sees three reasons the latest inflation report may represent a turning point in the Federal Reserve’s battle to suppress price pressures.

Those reasons included a “meaningful slowing” in the consumer price index month over month, “‘bullwhip’ payback” in durable-goods inflation and the contraction in the cost of health insurance.

In other words, because inflation came in under expectations in October, the Fed is on top of the inflation fight and therefore has more room to maneuver. That in turn means the Fed need not raise rates by 75bps in December, or even at all.

One good month, according to Mr. Lee, means that the Fed now has the leeway to enact less aggressive rate hikes. Having the leeway means, apparently, that the Fed will take full advantage of that leeway straight away and back off on rate hikes.

Tom Lee is likely to be disappointed. Jay Powell has shown no real indication that he is preparing to soften his stance on rates at all.

This is what happens when you drink your own Kool-Aid.

Tip Jar On Ko-Fi