The Fed: Recession Cometh
This week FRB Cleveland President Loretta Mester napalmed financial markets, much like Chair Powell did March 7-8 in front of Congress. Similar to March, the S&P 500 doesn't get it. Yet.
FRB Cleveland President Loretta Mester is a nonvoting FOMC member this year, so her interview this week will carry little to no weight in the minds of financial market participants drooling over the prospect of the Fed engineering a “soft landing”. But even I was shocked at her hawkishness. In short, she napalmed financial markets with a blistering preview of just what exactly the Fed is looking to do to the US economy in order to bring inflation back to 2% on a sustained basis.
The conclusion is exactly the same as back in March: The S&P 500 has yet to reflect the decisive shift in FED policy currently underway. But reflect it will.