Inflation Surges, a Recession Is Coming… Global Cost Of Refinancing Bonds Climbs To Highest Since 2009… Banks Are F*cked

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Inflation Surges, a Recession Is Coming

Heading towards a hard economic landing – Today’s shocking inflation numbers heighten the odds that the economy is headed towards a hard economic landing before year-end.

This is not simply because the Federal Reserve will have little alternative but to slam on the monetary policy brakes to get the inflation genie back into the bottle. Rather, it is because the Fed will be forced to do so at a time that we are experiencing an equity, housing, and credit market bubble that very likely will not be able to withstand a shift towards a more hawkish Fed monetary policy stance.

Today’s high inflation numbers leave little doubt that the Fed has its work cut out for itself. It is not only that at 8 ½ percent consumer price inflation is at its highest level since 1981. Rather, it is that the inflation is broad-based and is hardly confined to items that might have been affected by Covid related supply chain issues. As such, it will prove less transitory that the Fed had earlier thought.

Further complicating the Fed’s task of taming inflation is the fact that wage pressures are increasing and inflation expectations are rising. In recent testimony, Fed Chair Jerome Powell characterized the labor market as having become tight to an unhealthy degree as indicated by hourly wages increasing at a 5 ½ percent clip. Meanwhile, the market’s expectation of inflation over the next five years has risen to around 3 ½ percent which is uncomfortably above the Fed’s 2 percent inflation target.

FLASHBACK: Biden Admin Downplayed Inflation

White House officials repeatedly claimed that inflation would be “temporary” throughout parts of 2021, pushing back on concerns that it could be a longer-term problem.

The reminder comes as Americans continue to struggle with inflation in 2022 – the Department of Labor (DOL) announced Tuesday that March consumer prices soared 8.5%, marking the fastest increase in 40 years.

President Joe Biden and his administration have most recently blamed Russian President Vladimir Putin for cost increases, dubbing it – particularly prices seen at the pump – “Putin’s Price Hike.” Prior to this, however, the administration sought to downplay inflation, casting it as a temporary issue for many months.

Yes, It’s Biden’s Inflation

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