FAST FIVE: The Fed Will Soon Face Its First True Volcker Test: Continuing To Hike Into A Full-Blown Recession

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If we do get a recession, then the deceleration in earnings will intensify.

Unfortunately earnings, and earnings expectations, by themselves won't help you gauge whether a recession is on the way, as both tend to lag the cycle.

No one indicator is 100% reliable, but any high-quality ones will exhibit this regime-shift behaviour.

The Fed has insisted it is laser-focused on inflation and would prefer to over-tighten than under-tighten.

Unless inflation is substantially lower by then (it should fall, but not enough to give confidence it has returned to a low and stable regime), the Fed will face its first true Volcker test: continuing to raise rates into a recessionary economy.

Categories: ZH