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Here is the fact: the Fed had 13 monetary tightening cycles since 1945, and 10 of them resulted in a recession (see the chart below). "Soft-landing" exceptions: 1965-66, 1983-84, and 1994-95.
The Fed has just
Don't Expect The 1995-Type Soft Landing: Sell Stocks
Summary
- Inflation was never a problem during the 1993-1995 period.
- Globalization was disinflationary and made soft landings possible.
- The current trend on de-globalization is stagflationary.
- Prepare for the hard landing - recession and the bear market in S&P 500.
Commodity Trading Adviser (CTA), member of National Futures Association. Professor of Finance, research on Global-macro issues. Editor-in-Chief, Journal of Corporate Accounting and Finance.
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