The stock market’s strong start to 2024 could be short lived as the door for inflation to come back remains wide open, according to JPMorgan’s Marko Kolanovic. “We believe that there is a risk of the narrative turning back from goldilocks towards something like 1970s stagflation, with significant implications for asset allocation,” Kolanovic wrote in a note Wednesday. The strategist, one of the most followed on Wall Street, noted there are geopolitical similarities between the 1970s and now due to the multiple conflicts around the world. He also said U.S. deficits are “not on a sustainable path,” adding that onshoring and ongoing wars could push inflation higher. Indeed, Kolanovic pointed out the “risk of a second inflation wave.” Those comments came after the U.S. Bureau of Labor Statistics said last week that consumer and producer prices rose more than expected in January, rattling Wall Street. The S & P 500 is coming off its first weekly loss in six weeks. .SPX YTD mountain SPX year to date The Street is also enjoying a powerful start to the year after 2023’s strong performance. Year to date, the S & P 500 is up about 4% and reached an all-time high earlier this month above 5,000. This backdrop makes the market even more susceptible to a sharp pullback, Kolanovic said. “Optimism now is quite high and some describe the current regime as ‘parabolic stock markets’ and ‘platinum-locks,'” he said. “We find current markets developments odd; for instance the UK, Japan, and Germany being in a technical recession while Europe and Japan stock markets are moving to all-time highs, and various far-fetched applications of AI being fully priced in related stocks and expected to boost to the economy near term.” Kolanovic was bearish throughout 2023, missing out on last year’s artificial intelligence-driven rally. According to CNBC Pro’s Market Strategist Survey , JPMorgan has an S & P 500 target of 4,200. That’s 15% below Tuesday’s close.