The Market's Triple Whammy: Recession, Inflation and Rising Interest Rates Pose Problei
Take a recession, add an uncomfortable level of inflation and rising interest rates, and what do you have? A very difficult situation for even an ordinary stock market.</br></br>But for a stock market within wishing distance of record levels, that evil threesome creates an almost impossible hurdle.</br></br>A year ago, only a few brave economists predicted that the United States would be trying to cope with both a recession and inflation at the same time. Fewer still, would have predicted that some interest ratesÛÓ those not directly controlled by the Federal ReserveÛÓwould be rising.</br></br>These three problems are ordinarily mutually exclusive. A slowdown in the economy is supposed to bring inflation downÛÓway down. And with the snap of a finger, the chairman of the Federal Reserve is supposed to be able to lower interest rates.</br></br>But this economy isnÛªt going according to plan. Corporate profits are continuing to deteriorate, and inflation is still troubling enough to cause the interest rates on long-maturity bonds to riseÛÓnot fall.