Investing.com – the financial markets are on a “potential collision course for disaster”, according to one major investment firm.
Guggenheim Partners is predicting that the Federal Reserve will have to raise rates aggressively to counter massive, ill-timed fiscal stimulus, which will push the economy into recession.
In a note to clients, the firm says there is too much fiscal stimulus for the economy at this stage of the business cycle. The result will be inflation and wage increases that will prompt the Fed to increase interest rates another seven times in the next two years.
Guggenheim says the economy needs fiscal drag not stimulus at this point.
The fed funds rate will reach a target range of 3.25%-3.50%, which will crimp the free cash flow of companies and cause a recession.
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