GDP estimates for 1Q2022 getting cut … The Langer Consumer Comfort Index is dropping like a stone again… The Fed is walking a tightrope…

Over the past few weeks, Fed speakers are bemoaning inflation and voiced their wishes to squash it. They frequently mention how effective their monetary toolbox is in managing inflation.

There lies a massive contradiction between words and actions within these numerous speeches and media appearances. If the Fed is so intent on fighting inflation, why are they still stimulating the economy and markets with crisis levels of QE? Why is the Fed Funds rate still pinned at zero percent?

Within this ambiguity comes an abundance of risk for investors. If the Fed walks the walk and fights inflation vigorously, markets appear ill-prepared for a sharp decline in liquidity and resulting market instability. Conversely, the Fed may be just talking the talk and hoping inflation starts abating soon. In such a circumstance, they may not be as forceful as they appear.

The Fed is walking a tightrope between instability and inflation. Can they successfully tame inflation without causing severe market dislocations? The tightrope is thin, and the consequences of falling off to one side or the other are severe. Investors best think about the Fed’s perilous act they are getting ready to attempt.

Rand Paul: Inflation will get worse

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EXCLUSIVE: Sen. Rand Paul, R-Ky., released a new report Tuesday on the troubling effects of inflation on low and middle-income families as well as small businesses.

Paul, the top Republican on the Senate Committee on Small Business and Entrepreneurship, blames the 7% spike in consumer prices – a 40-year high – on excessive coronavirus relief spending by Congress, and warns the rising prices are “only going to get worse.”

Raises to be less than inflation

  • U.S. companies are expecting to pay an average 3.4% raise to workers in 2022, according to a Willis Towers Watson survey.
  • That growth would be higher than in 2020 and 2021 — and is expected across all types of positions, regardless of seniority.
  • Difficulty finding and retaining workers is the top reason cited for higher pay. Inflation and higher profits also are factors.

Mortgage Rates Highest Since ’20



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