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US equity markets like the idea of Fed rate cuts so next week's US CPI is key, and not just to macro PMs - it's critical for equity L/S investors as well.

Consider a stock picker who likes Salesforce over Adobe as their favourite software name. Or the retail fund that picks Etsy over eBay. Those RV pairs are chosen for fundamental reasons.

But $CRM & $ETSY have positive exposure to US inflation expectations; $ADBE & $EBAY have negative exposure.
Their bottom-up bet performs well if CPI surprises to the upside / suffers if a recession is imminent.

This is #3 of Quant Insight's Hidden Exposure series revealing the macro risks equity L/S pairs are running.

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