MARKET RECAP

As someone once said, “be careful what you wish for, you just might get it.” Well, the Fed has gotten their wish, at least so far, the biggest inflation cheerleaders saw it rise by 4.2% in April, the biggest increase since 1981, and much higher than expected. The Fed isn’t worried though, thinking the increase is transitory, lets hope they are right because we do not want a 1970s replay. Stocks were down by 1.4% on the week on the news.

In the last two weeks, inflation had a big overshoot and hiring a big undershoot. Of course, one month is not a trend and there are good explanations for all of this, but inflation and unemployment together go by the nightmarish name of stagflation.

If inflation continues to increase at an unexpectedly high rate it could force the Fed’s hand on interest rates, which would lead to lots of unintended consequences.

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