Raise your hand if you were surprised by yesterday’s report that inflation during June was running at a steep 9.1% annualized rate!
We all know it has become a problem. We also know how to stop it – bring on a recession!
The hesitancy of the Fed to intentionally cause a recession is understandable, as they hope for a “soft landing.”
Of course, the slower the Fed clamps down on inflation, the higher the probability of causing stagflation – no GDP growth while still having stiff price increases – the worst case scenario.
Before that inflation report, there was a 58% probability the Fed would increase interest rates by 75 basis points or three-quarters of one percent, when it meets in two weeks.
Today, there is a near-90% probability of a full percentage point or 100 bps increase!
Good, rip that band-aid off and bring on a quick recession …. and the subsequent bull market!