Wall Street is increasingly worried about inflation’s resurgence

Recent signs of inflation have some Wall Street
strategists concerned about the odds of a soft landing in the US
economy. JPMorgan’s Marko Kolanovic predicts the S&P 500 could fall
to 4,200 by the end of the year. Others, like State Street Global
Advisors’ Michael Arone, also believe investors may be underestimating
the risk of stagflation in the next 12 to 18 months. If stagflation
occurs, real assets like commodities could outperform
stocks and bonds.
Michele Schneider of MarketGauge.com sees
similarities between the current inflation path and that of the 1970s
and 1980s, noting warning signs in commodities such as sugar and
cocoa. However, some economists argue that this bout of inflation may
be more similar to the post-World War II price spike, which didn’t
result in stagflation. Factors such as surprise growth in the US economy
and potential productivity gains could help keep
inflation in check.