In this week’s Closing Bull, Jerome Powell has told Congress that the Fed’s rate-hiking crusade against inflation could cause a recession. Inflation continues to hurt the economy with our without attempts at being tamed. President Biden urges Congress to suspend Federal gas and diesel taxes for three months. The Consumer Sentiment report from Michigan University showed hope as consumers expect inflation to ease.
Let’s get into the news.
Key News This Week:
Jerome Powell tells Congress that the crusade against inflation could cause a recession.
Inflation would continue to hurt the economy with or without being tamed.
Biden urges Congress to suspend federal gas and diesel taxes.
The Consumer Sentiment report from Michigan University shows hope as consumers expect inflation to ease.
Read the Transcript
Hi and welcome to my financial markets’ re-cap for the week.
It was a short week for the markets with Monday being a holiday in the US. Finally, we saw some light at the end of the tunnel for the market as it managed to seek out a winning week to the upside.
It’s been a crazy year so far with so much volatility. We are looking for it to recover some more in the coming days and weeks before we see some more selling.
Anyway, it was quiet for us this week, but we are expecting to grab at some of this recovery rally in the next couple of weeks.
That was the system update, what is happening in the news?
The news was pretty light this week in terms of its effect on the markets.
There was a carry-over from the Fed with Jerome Powell telling Congress that the Fed’s rate-hiking crusade against inflation could cause a recession. He said he doesn’t think the central bank will need to provoke a downturn but, said taming inflation is absolutely essential.
It’s a bit of a paradox, as taming Inflation hurts the economy by raising interest rates and reversing the quantitative easing we have gotten used to these last number of years. But then inflation also hurts the economy, so it seems the Fed can’t win.
The sweet spot would be cooling the economy without causing a recession and igniting a further market meltdown. The best news could be if prices (especially oil and gas) show significant signs of easing and there are glimmers of hope there recently as Oil has come from its high a little at least.
Speaking of energy, President Biden is urging Congress to suspend federal gas and diesel taxes for three months by borrowing $10B from the Highway Trust Fund. It could ease Pump prices but, may not have enough support. More on that perhaps next week.
The last piece of news this week was the widely-followed Consumer Sentiment report from Michigan University that came in very low but, showed some hope as consumers expect inflation to ease compared to a previous report.
That’s it from me, It’s Friday, time to down tools, thanks for watching, and bye for now.
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