The bears are back and they sound like a broken record. “We are heading to a recession.” “Inflation is back, just look at oil prices.” The Fed is likely done raising rates, “…but they are going to keep these rates too high for too long.” Finally, they remind us that Fed policy has “long and variable” lags. We know now that these experts have been dead wrong for a year and a half, but are they right now? Let’s take these points one at a time…
Last week, bond-rating agency Fitch Ratings downgraded the rating of the United States to AA+. One has to wonder about the timing of the downgrade. Why now? Where was the downgrade of banks before Silicon Valley failed? The problem with rating agencies is and always has been that they view the world through the rear-view mirror.
