Recessions are inevitable, they’re a part of every business cycle. Recessions will happen, and no amount of predicting and prognosticating can prevent them, CNN Business.
Wall Street investors are conflicted. They actually want the Fed to raise interest rates. That is a first, a remarkable first.
Not only that, investors want a recession.
Has the world turned upside down?
CNN reports. "Investors are uneasy as the Federal Reserve gears up for its latest policy announcement on Wednesday. But their hope is that the central bank and Chair Jerome Powell will keep talking tough, steering the path forward at an uncertain moment.
"What’s happening: The Fed is expected to hike interest rates by three-quarters of a percentage point as it continues with its ambitious campaign to bring down inflation, which hit a 40-year high in June. There had been some speculation that the Fed could raise rates by a
full percentage point for the first time in its modern history, but that now looks
less likely.
"Investors concede that the Fed has a difficult task at hand as it tries to control inflation without raising borrowing costs so aggressively that it tips the US economy into a recession.
"But for now, they’d rather the Fed indicate that it plans to keep its resolve rather than adopt a more accommodating stance. In unstable times, the argument goes, consistency is key."
The last two statements amounted to a contradiction. I said investors were conflicted.
“The last thing the Fed wants to do now is to allow the market to think it’s about to embark on a dovish pivot, despite increasing evidence that the economy is slowing,” Michael Hewson, chief market analyst at CMC Markets, said.
"Some Wall Street analysts are hoping,
the National Bureau of Economic Research will officially determine we’re in a recession and allow markets to break the dread cycle," CNN.
“The sooner we get the recession, the better,” said Kevin Gordon, senior investment research manager at Charles Schwab.
From Schwab, now that is man bites dog news.
CNN added, "Although that may seem counter-intuitive, pulling forward the recession’s start date would ultimately be a positive for investors, Gordon said. That’s because a recession would mean the turning point for stocks is closer rather than further away, and that the bottom is closer than we think.
"Then, investors could move onto the next cycle: searching for hope. Economists liken it to finding green shoots after a forest fire."
Many were hoping for a bright side to all this.
The Federal Reserve on Wednesday raised interest rates for a fourth time this year to further slow down the economy. The Fed hiked interest rates by three-quarters of a percentage point.
