Inflation is top-of-mind for investors after the CPI rose more than expected in April.
But according to Marko Papic, investors are misreading how the Fed will react.
He said the S&P 500 faces weak returns in the near-term partly because of this.
Members of the Federal Reserve's Federal Open Market Committee have been drilling their message into investors for several months now: They won't respond to a spike in inflation this year.
And yet, investors still don't believe them, according to Marko Papic, the chief strategist at Clocktower Group, which manages $1.5 billion in assets.
In an interview with Insider on Friday, Papic said investors are anticipating Fed intervention if inflation gets too hot this year. He pointed to the fact that the median investor expects the central bank to take a more hawkish stance on interest rates over the next two years, shown in the chart below.