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A number of experts say Fed can’t beat inflation without a recession – Stocks down as Fed rate hike sinks in – Gold may take biggest weekly fall – China tech stocks averted delisting as US gets ‘historic’ access to audit data
Separate statements by several experts are all pointing to historical patterns which indicate the Federal Reserve cannot meet its inflation goal without a recession.
“The expected increase in the unemployment rate between this year and next has never happened without the economy falling into a recession,” Ryan Sweet, chief U.S. economist at Oxford Economics, wrote on Wednesday, Yahoo Finance reported.
“I think the market is probably right that inflation will come down from its current levels,” Former Treasury Secretary Lawrence H. Summers said in an interview with MSNBC. “There is still a question [of] whether it will stay down and how much we have to do to make sure that it stays down.”
“And whether it can be brought down to stay down without a recession is a very large question,” Summers added. “My guess is that the Fed will in the end have to suffer through a recession if we’re going to bring inflation down.”
“The Fed remains willing to risk a recession in the labor market in order to bring inflation down,” wrote Michael Gapen and the economics team at Bank of America Global Research. “And, if anything, the December projections suggest that risk has risen, not diminished.”
Yahoo Finance’s Jared Blikre wrote: “History says the Fed can’t meet its inflation goal without a recession.” Blikre pointed to The Sahm Rule, a newer Fed model which has correctly predicted the last nine recessions and done so much faster than they were officially declared in real-time.
In early trading on Friday, the Dow Jones Industrial Average futures were down roughly 323 points, or 0.97%, while the S&P 500 slipped 0.95%, and the technology-heavy Nasdaq futures sank 0.53% lower.
All US stock futures are down over the last five days, with the Dow slumping by 1.83%, the S&P 500 dipping by 1.02%, and the tech-heavy Nasdaq composite tumbling 2.28% lower, FOXBusiness reported.
The benchmark U.S. 10-Year Treasury note ticked up +0.094 four yield of 3.544%
West Texas Intermediate crude futures trickled 1.97% to $74.61 a barrel, as gold moved 0.44% higher to $1,795.60 an ounce
In tech stocks on Friday, Apple was down roughly 0.02%, with Microsoft off nearly 0.61%, yet surprisingly Meta was up nearly 2.24% pre-market trading.
Although gold prices firmed on Friday, they are on course for their biggest weekly fall since mid-November, with several central banks signaling that more rate hikes are needed to curb inflation.
Spot gold rose 0.3% to $1,782.61 per ounce. However, for the week so far, it’s down about 0.8%, having hit a one-week low in the previous session. U.S. gold futures were up 0.3% at $1,792.70, CNBC reported.
A major delisting of Chinese technology stocks has been averted, one that included such giants as Alibaba (BABA) and JD.com (JD) and over 100 others, which were all facing the threat of being kicked off the US stock exchange.
But in a “historic” move, US regulators have been granted full access to the audits of the financial statements of Chinese companies, averting a delisting, CNN reported.
“For the first time in history, we are able to perform full and thorough inspections and investigations to root out potential problems and hold firms accountable to fix them,” said Erica Williams, chair of the Public Company Accounting Oversight Board (PCAOB) in a statement, adding the access was both “historic and unprecedented.”
