Inflation fears intensify

This sparked fears of more aggressive action from the Fed that could cause further damage to the economy leading to the dreaded recession. To these fears was added the worse-than-expected results of two of the big North American banks: JP Morgan and Morgan Stanley. Despite the higher interest rates, which in principle should benefit them, income fell significantly due to inflation, geopolitical tension, and, above all, the reduction in liquidity in the market due to the end of "Quantitative Easing" of the Fed, as indicated by Jamie Dimon, CEO of JP Morgan. The slowdown in the economy is a fact, and excessively restrictive monetary policy action by the Fed could have unintended consequences. This is what the market and investors, in general, are trying to weigh in. Statements made yesterday by Fed Waller were quite explicit. Despite being known as being "hawkish" (more inclined to high-interest rates and restrictive monetary policies), Waller admitted that a hike of 100 bps in the next meeting would only happen if the following retail sales data (domestic demand) and housing are higher than expected. Therefore, these figures published between today (retail sales) and next week will be decisive in assessing the Fed's next action.