Inflation data for March surprised everyone. It was hotter than expected, dashing hopes of the Federal Reserve lowering interest rates this year. The core CPI, a key measure of inflation, rose more than anticipated and has been climbing at a worrying pace for the past few months. Right now, CPI is growing at annual rate of 3.5%, while core inflation which deducts the volatile food and energy prices, is growing at a pace of 3.8% per annum. Both are much higher than Fed target of 2%.
The market reacted swiftly, abandoning its bets on rate cuts. In early April, this optimism sent the tech-heavy Nasdaq Composite Index soaring to around 16,500. However, as expectations shifted towards the Fed keeping rates steady, or even raising them, the index has taken a tumble. By mid-April, it had dipped below 15,700, reflecting a decline of 800 points. This drop signifies investor anxiety surrounding inflation and its potential impact on interest rates and corporate profits. The market is now bracing for a different scenario than the one anticipated just a month ago.

Fed Will Surprise Everyone Next Month, Market Will Fall 40% But This'll Be The Biggest Investing


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