The U.S. economy is likely headed for a recession as the Federal Reserve raises interest rates at the fastest pace in decades, according to Bank of America strategists.
Sarge986 president Stephen Guilfoyle and Revere Securities CCO Scott Fullman preview the August jobs report and explain why now is the time for investors to be cautious on"The Claman Countdown."
Bank of America is once again warning of a coming recession jolt after the Federal Reserve pledged to "forcefully" fight record-high inflation, even if means slowing the economy. In a Friday analyst note, strategists led by Michael Hartnett predicted a "fast inflation shock, slow recession shock" as the economy continues to confront surging consumer prices, high household savings, billions in fiscal stimulus and the impact of the war in Ukraine.
Hartnett said he expects "new highs in yields" and "new lows in stocks," after Fed Chairman Jerome Powell's keynote speech in Jackson Hole, Wyoming, last week, where he hinted at an increasingly hawkish central bank that is determined to wrestle inflation closer to its 2% goal, regardless of the potential economic fallout.
"While higher interest rates, slower growth and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses," Powell said. "These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain."Stocks plunged after Powell's comments, which fueled a 1,000-point market rout.
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