... [+]This week is a critical one for the stock market. To set the scene markets have rallied strongly since the start of the new year in particular European and Asian markets as inflation and economic pressure have eased in Europe and as China reopens from COVID.
This complacency is also evident elsewhere in the low level of market volatility and also in the performance of ‘meme’ stocks. It's a critical week because not only do we have earnings from some of the biggest companies in the world such as Apple and AmazonWith inflation coming down and looking like it has already peaked the Federal Reserve is expected to increase interest rates by 25 basis points with the potential for another increase in the following month.
Indeed it's unlikely that he can do the opposite. It's simply unlikely that he could allow markets to rally more which would add further fuel to improving financial market conditions potentially to commodity prices and then this in turn could spur inflation higher later in the year. It's a difficult environment for the Fed. While inflation is coming down and many lead economic indicators such as the new orders component of the ISM manufacturing index and various other readings from Fed surveys point to a sharp slowdown in growth. There are large parts of the economy that appear robust.
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