U.S. stock index futures fell sharply on Thursday, with growth shares taking the biggest hit, after the Federal Reserve’s biggest rate increase since 1994 to tame rising prices fanned worries of a recession. The Fed on Wednesday matched market expectations by hiking interest rates by 75 basis points. It also projected a slowing economy and rising unemployment in the coming months in the face of the worst inflation in 40 years.
“We view it as increasingly likely that a recession and higher unemployment will be necessary to tame inflation: with such a gloomy macro picture looming over the markets,” said Geir Lode, head of global equities at Federated Hermes Limited.
Following the Fed meeting, Wells Fargo said the odds of a recession now stand at more than 50%.
On the equities front, Morgan Stanley led losses among major U.S. banks with a 2% slide… Mega-cap firms [such as] Apple plunged by a similar margin.
MacDailyNews Take: Sub-$130 for Apple is back in play.
‘Tis best to get a handle on inflation, if you know how, while you still can. – MacDailyNews, May 11, 2021
Earlier this year, Interactive Brokers founder Thomas Peterffy said, “Inflation is 7% — 1% or 2% [in interest rate hikes] doesn’t mean anything. If they really wanted to stop inflation, they would have to raise rates to 4%, 5%, 6%.”
Stop the misguided crusade against domestic energy production and profligate federal spending and inflation will be stopped dead in its tracks. It’s not difficult. – MacDailyNews, May 11, 2022
Inflation is repudiation. — Calvin Coolidge
When a business or an individual spends more than it makes, it goes bankrupt. When government does it, it sends you the bill. And when government does it for 40 years, the bill comes in two ways: higher taxes and inflation. Make no mistake about it, inflation is a tax and not by accident. — Ronald Reagan
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