This segment of What’s Ahead explains why April has been brutal for stocks—with no lasting relief in sight. This, despite the fact that reported earnings in the first quarter have, so far, been impressive.
But markets are forward looking—and there are dark clouds on the horizon. Supply-chain disruptions are being exacerbated by the war in Ukraine and by China’s recent sweeping, cruel, idiotic and, ultimately, ineffective Covid lockdowns.
And the Federal Reserve is locked in the grip of the theory that slowing the economy is the way to fight inflation. This is the road to recession—and battered profits.
One can only hope that, miraculously, the Fed will have an epiphany and do what it has occasionally done before: focus on stabilizing the value of the dollar. Back in the late 1980s and most of the 1990s our central bank did that by roughly tying the dollar to gold.
