Wall Street bulls will have a “narrow path” to win in 2023, provided inflation eases quicker than anticipated, says Ed Yardeni, founder of Yardeni Research. “They almost can’t win,” Yarden told Bloomberg TV in an interview that is cited in an article in Financial Advisor.

If the economy remains strong, the Fed will need to raise interest rates significantly higher. In that case, inflation could deflate faster than expected, and Yardeni predicts that prices will cool down faster than most Wall Streeters have forecast. He highlighted used-car prices, energy prices and rents that are falling fast as indications that inflation could be tamping down more than expected. And if inflation hits 3% to 4% early this year, as Yardeni expects, that would soothe worries about spiraling prices, the article contends. While an inverted yield curve is usually a reliable indicator of recessions, as it often signals that “there’s going to be a financial crisis,” its effect hasn’t caused “a wider contagion,” Yardeni said in the interview, adding that the economy is “more likely to get a soft landing out of all this.” Certainly there are leading indicators that has many on Wall Street spooked about a possible recession, which Yardeni believes will happen early in 2023, if it happens. But the economy is currently quite hardy, the banking system is strong, and consumers are still doing well, particularly as wages are expected to increase more than prices this year, Yardeni pointed out. “Purchasing power is going to be there for consumers,” he told Bloomberg, according to the article.