The Fed is now
cornered courtesy of the coming inflationary recession.
Let’s start with the
economy first.
The 2s-10s yield curve
is just a 19.4 basis points away from inversion. The last FOUR times this yield
curve inverted the U.S. experienced a recession soon after. I’ve identified
that line on the chart below:
A recession is bad
enough news because it means a bear market in stocks and most likely a crash.
Here’s that same chart with the S&P 500 below it. Note what happened to
stocks soon after the yield curve inversion hit (note that the 1990 market saw
a 17% drop, but the chart doesn’t show it well).
On top of this, inflation is roaring in the financial system. Gasoline is up 80% in the last 12 months. Lumber is up 36%. Copper is up 15%. And wheat has exploded 90% higher!
Remember, the consumer accounts for 75% of GDP in the U.S. What do you think happens to consumer spending when inflation eats into incomes? There is a reason Presidential ratings are highly correlated to gasoline prices!
And all of this is happening when the Fed only just ended QE and still has rates at zero.
Yes, we are
rapidly heading into an inflationary recession, and the Fed hasn’t even begun tightening
yet. If the Fed tightens to rapidly to kill inflation, the economy collapses. And
if the Fed takes its time raising rates, inflation rages, and the economy again
collapses.
The Fed is officially
cornered. There is no possible way to navigate this mess without disaster. Remember
the last four recessions involved a stock market crash. This one will likely
prove no different.
For those looking to
prepare and profit from this mess, our Stock Market Crash Survival
Guide can show you how.
Within
its 21 pages we outline which investments will perform best during a market
meltdown as well as how to take out “Crash insurance” on your portfolio (these instruments
returned TRIPLE digit gains during 2008).
To pick
up your copy of this report, FREE, swing by:
https://phoenixcapitalmarketing.com/stockmarketcrash.html
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