Investors have just been reminded of this, and many seem less confident that the Federal Reserve will soon lower interest rates—or conquer inflation without triggering a recession.
Rather suddenly, selling stocks and hedging portfolios have become unusually popular as the realization sets in that the Fed’s ability to engineer an economic soft landing is almost as difficult as sailing through a hurricane to a tropical island to find coconuts that contain ready-made pina coladas.
Moody’s, the bond rating agency, has warned that a shutdown would be a “credit negative” that would illustrate America’s political dysfunction compared with other AAA-rated sovereign nations. This column has been warning of rising risks for months. Reader feedback has often been critical, which we interpreted as a worrisome sign of just how fervently investors wanted to believe in a happy ending.