On the fence about becoming a Premium Reader? Here's a 7-day free trial so you can do your own due diligence on Qluster Research 🚀

Get 7 day free trial

Cancel at any time. No hard feelings 🤗

Inflation is transitory - SIKE!

This morning, US Federal Reserve Chairman Jerome Powell has startled the markets with a drastic hawkish twist in his tone that finally acknowledges the giant purple elephant in the room.

Inflation.

Share

Following the sudden change of heart from a generally dovish Fed Chairman, Q muses - is it Last Call for the cheap money party?

Speaking to an audience during a committee meeting in Washington, Fed Chair Powell said it is 'time to retire the word transitory'. 

It appears the chief policymaker at the US central bank has finally acknowledged the threat of higher and more persistent inflation, which has inflamed now that the US economy yields robust economic data throughout this COVID-19 economic recovery.

Inflation is expected well into the middle of next year, and it is 'appropriate in my view to consider wrapping up the taper of our asset purchases'. 

And, as JPOW mentioned in November - 'a few months sooner'.

Qluster analysts perceive a pullback in the markets, as expected, while the money markets priced in two-interest rate hikes throughout 2022. In particular, the equity markets appear to receive the brunt of this extreme downside pressure.

As anticipated in Edition #154 published last night, the Dow Jones (DJI) fell to 34.5K Index Points. Meanwhile, the Nasdaq (NDX) accommodated what appears to be the right-shoulder formation on a Head and Shoulders bearish reversal pattern. 

Q begins with an examination of the Dow Jones Industrial Average Index (DJI30) price chart below…