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[Markets] The Only Soft Landing In 50 Years Was Captain Sully On The Hudson The Only Soft Landing In 50 Years Was Captain Sully On The Hudson

Authored by Vincent Cignarella, FX & Macro Strategist, Bloomberg,

History does not support the idea the Fed can engineer a soft landing.

Since 1972, every single time inflation -- as measured by yearly CPI -- spiked higher, the Fed followed with tightening. And what happened, each and every time with the exception of 1984, a recession soon followed. This time will not be different.

The good news is that after every recession, stocks rallied year-over-year and, with the lower rates that followed, bonds also gained.

Since January 1991, the Fed has changed the Fed Funds target rate a whopping 91 times. Every time it raises, it has to cut again.

So why is there a 2% target and why, each time inflation rises above it, does the Fed need to orchestrate a recession?

It makes you wonder what kind of growth cycles the economy would have if the Fed just picked a number, stayed there and let market supply and demand set rates.

Tyler Durden Fri, 08/05/2022 - 14:48
Published:8/5/2022 2:36:30 PM
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