Billionaire hedge fund manager Bill Ackman believes the Fed will fail at its task of bringing inflation down. “We do not believe that it’s likely the Federal Reserve is going to be able to get inflation back to a kind of consistent 2% level,” he said. He also expects interest rates to remain elevated for years, which will cause serious issues for the stock market. Goldman Sachs is also waving a warning flag, saying that the bear market isn’t over yet.

Business Insider/Theron Mohamed
Billionaire investor Bill Ackman warns the Fed will struggle to crush inflation – and higher long-term interest rates could hit stocks

Bill Ackman expects inflation and interest rates to remain elevated for years, darkening the outlook for stocks.

“We think inflation is going to be structurally higher going forward than it has been historically,” he said on a third-quarter call with investors in his Pershing Square hedge fund. “We do not believe that it’s likely the Federal Reserve is going to be able to get inflation back to a kind of consistent 2% level.”

Inflation soared to a 40-year high of 9.1% in June and remained at 7.7% in October. The Fed has reacted by lifting interest rates from near zero in March to a range of 3.75% to 4% today and signaled they could peak above 5% for the first time since 2007.

You can read the full story, here.

Yahoo Finance/Brian Sozzi
Stocks: ‘The bear market is not over,’ according to Goldman Sachs

The feel good vibes in the markets this holiday season may be coming to an end, warns Goldman Sachs.

“The bear market is not over, in our view,” closely followed Goldman Sachs strategist Peter Oppenheimer wrote in a new note. “The conditions that are typically consistent with an equity trough have not yet been reached. We would expect lower valuations (consistent with recessionary outcomes), a trough in the momentum of growth deterioration, and a peak in interest rates before a sustained recovery begins.”

You can keep reading, here.

ZeroHedge/Eric Peters
The No Normal

“Restoring price stability will take some time and requires using our tools forcefully to bring demand and supply into better balance,” reminded Powell this past summer, on Aug 26. The equity market had just jumped 15% from the lows on hopes of a gentler Fed. The Fed doesn’t tighten into weaker equity markets and a contracting economy. Ever. It’s a rule. Powell changed the rule, an opportunity to win back inflation credibility. And the market listened. The swap market anticipates inflation will collapse to an average of 2.28% next year from 7.02% this year.

Hard landing. Soft landing. No landing. Investors are dusting off playbooks from the past. There is a little bit for everyone.

Continue reading, here.

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