The ranks of stock market bears are thinning as investors increasingly concede that no recession is on the horizon. Inflation will continue to drop, with positive—not negative—effects on earnings, we contend, because profit margins have been hurt—not helped—by high inflation. Lower inflation should boost margins and earnings. … The ranks of stock market bulls are growing, their case strengthened by broadening stock market leadership and more bullish sentiment. … Also: We don’t buy the argument that recession will descend once consumers spend their pandemic windfalls, for several reasons. … And: The latest economic releases support our rolling-recession-with-disinflation outlook.
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