It's not a fear of recession...it's the opposite.Economic growth...

It's not a fear of recession...it's the opposite.

Economic growth forecasts are strong. So strong in fact that it is leading to high and unsustainable levels of inflation. Economic growth for the final qurter of 2021 was an annual rate of 6.9%. This is huge. In an attempt to try and reduce the inflation or control it and to cool economic growth, interest rates are expected to rise. Markets do not like interest rate rises. It increases the costs of borrowing and can impact on profits and project viability. It also reduces household cashflow and can result in slowing the economy down (not forcing it into a recession).

It is important to note also that inflation could be strongly linked to household increased cash position from covid conditions, increased demand for consumer goods and the largely documented supply chain issues which are leading to a disparity between demand and supply. The hope is that as supply chain issues are resolved, this will smooth out inflationary pressures, though this has been the hope for the last 12 months and there still doesn't seem to be much progress made and inflation continues at around 7% (well above Fed's targeted 2%).

Markets will continue to remain volatile give the uncertainty around inflation and expectations of increasing interest rates. So expect volatiliity. A market correction in Jan bodes well, but definitely still in the shadows of what exactly the future holds.