Pressures Appearing in the US Economy
We should anticipate a long cycle of highly increased levels of market volatility over the coming years. It should be a fantastic trading environment, but not one for the faint of heart.
The Federal Reserve Bank’s index of financial conditions continues to soften, with the latest data showing the easiest conditions since November of 2021.
Remember, it was in November of 2021 when Jerome Powell finally admitted that the inflation in the United States was not transitory after all. Inflation at the time was over 6%, and prices were climbing in nearly every part of the economy. This was hardly one of Powell’s shining moments. Given the looseness of current financial conditions and given the Fed’s obsessive focus on finding excuses to cut rates as soon as possible, one can easily conclude that there must be some be very ugly risks beneath the surface that aren’t showing up yet in the official economic data.