Increase In Core Inflation Won t Be Transitory
Bad Timing
For decades the Federal Reserve anticipated inflation whenever the Unemployment Rate fell to a low level. In 9 of the last 10 recessions since 1954 the Fed hiked the federal funds rate over a period of time until they went too far. The Unemployment Rate subsequently jumped as the economy entered a recession causing the Fed to slash the federal funds rate. This pattern is consistent especially with benefit of hindsight. The one exception was in 1990 when Saddam Hussein invaded Kuwait causing oil prices to spike and a brief war.
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Interest Rate Spike Could Derail the Equity Buying Binge
“The economy is on the mend and vaccine distribution is improving which provides the back drop supporting the buy-the-dip mentality no matter how shallow.
Please share this article - Go to very top of page, right hand side, for social media buttons. There is no doubt that the bull market that began in March 2020 after a 35% plunge has evolved into a speculative binge that has further to run. The expectation was that the S&P 500 would experience a sharp decline that would bring it down to 3550 before a subsequent rally took the S&P 500 above 4000.