“The 1972-1984 playbook shows how equities bounced right as the CPI peaked even as the earnings outlook deteriorated markedly at the same time,” Andreas Steno Larsen, founder and CEO of Steno Research, said in a note published on Dec. 26, explaining reasons to begin 2023 with a bit of risk exposure. “If the market sniffs out an inflation-driven pause or a pivot from the Fed, even before a drawdown in risk assets is seen, we may get a disinflation rally that will wrong-foot all investment banks.”

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