9 December 2022

Invesco Strategist Warns the Fed Is ‘Playing a Dangerous Game’ That Could Lead to ‘Significant Recession’

Invesco Strategist Warns the Fed Is 'Playing a Dangerous Game' That Could Lead to 'a Significant Recession'

The chief global market strategist at Invesco, a global investment firm with $1.3 trillion under management, has warned that the Federal Reserve is playing “a dangerous game” with its 75-basis-point rate hikes. She noted that the Fed’s action could lead to “a significant recession.”

Invesco’s Chief Strategist on Recession and the Fed’s Efforts to Fight Inflation

Invesco’s chief global market strategist, Kristina Hooper, shared her thoughts about the U.S. economy on Bloomberg’s What Goes Up podcast last week. Invesco is a global independent investment management firm with over $1.3 trillion in assets under management (AUM) as of Sept. 30. The firm employs more than 8,400 people in over 26 countries.

Hooper, who has 21 years of investment industry experience, explained that the stock market has been growing very volatile as the Federal Reserve continues its efforts to fight inflation. She noted that the central bank has indicated that it will not let up until inflation is under control, even if it means trouble for the economy. She added that the Fed may raise interest rates by another 75 basis points at the upcoming Federal Open Market Committee (FOMC) meeting in November, and the same again in December.

The Invesco chief global market strategist cautioned: “75 is the new 25 … When you are raising rates in 75-basis-point increments and you’re not giving any time for it to process through and make its way through into the data, you’re playing a dangerous game.” She concluded:

The more you’re doing it, the more likelihood you create of having a recession — and a significant recession.

Many people have warned about a recession. A recent survey shows that 98% of chief executives are preparing for a U.S. recession while 99% are preparing for a recession in the EU.

Tesla CEO Elon Musk said last week that the recession could last until the spring of 2024. Goldman CEO David Solomon sees a good chance of a recession, advising investors to be cautious. JPMorgan Chase CEO Jamie Dimon said a recession could hit the U.S. economy in six months.

Renowned investor Jim Rogers has warned that the recession will be the worst in his lifetime. Gold bug and economist Peter Schiff also believes that the Federal Reserve’s action could lead to a severe recession in addition to market crashes and a massive financial crisis.

What do you think about the comments by the Invesco strategist about the recession and the Federal Reserve’s action? Let us know in the comments section below.

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