The latest inflation figures in the United States look relatively positive, with a slight decline in annualized inflation rates. However, only three items of the CPI components declined in December. Persistent inflationary pressures that threaten to undermine the rate-cut narrative that financial markets have adopted are present below the surface. Investors expect the Federal Reserve to pump the monetary laughing gas machine, anticipating further rate cuts and monetary easing to support multiple expansions.
However, in this wave of fervent optimism, there are dark clouds looming on the horizon: another wave of regional bank troubles added to the burgeoning crisis in the commercial real estate market.
Continue reading Will commercial real estate trigger the next financial crisis?