The Fed’s like a ‘reformed smoker’, Stanley Druckenmiller says, while Jeff Gundlach warns it’s driving the US into a dumpster. 6 market experts talk straight about rate hikes.

Fed Chair Jerome Powell.

Hotter-than-expected inflation has prompted Wall Street to take stock of the Federal Reserve.
With another jumbo rate hike on deck, investors worry the Fed risks a recession by going too far. 
Here’s what Stanley Druckenmiller, Jeff Gundlach and 4 other Fed watchers had to say.

A surprisingly hot US inflation number has galvanized Wall Street into taking stock of the Federal Reserve’s efforts to cool it — and some investors aren’t holding back.

The inflation shock last week has cemented in the view the Fed will raise interest rates by at least 75 basis points at its meeting next week.But it will mean yet another oversized increase from the central bank for its fifth rate hike this year. 

There are worries the Fed’s paying too much attention to inflation data releases, because they don’t reflect what’s happening at the time. 

That lag means policymakers run the risk of overtightening, at a point when the economy needs some relief — and that would hit stocks hard.

Here what six straight-talking investors and Fed watchers say about its interest-rate campaign and the chances it will cause pain for the economy and markets.

1. Stanley Druckenmiller: The Fed’s abrupt shift after years of easy money signals a bleak outlook for stocks.

“Now they’re like reformed smokers,” Druckenmiller said. “They’ve gone from printing a bunch of money, like driving a Porsche at 200 miles an hour, by not only taking the foot off the gas, but just slamming the brakes on,” he said.

“There’s a high probability in my mind that the market, at best, is going to be kind of flat for 10 years,” the billionaire investor said.

2. Jeff Gundlach: Fed policymakers are on the brink of going too far with tightening.

“I’ve been saying for a long time that the Fed does nothing but …read more

Source:: Businessinsider

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