CFOs see recession ahead while retail clings to recovery hopes. Inflation reaccelerates as Wall Street exits quietly

Jay Powell once reassured everyone that inflation expectations were “well anchored.” That anchor is dragging, and the ship is taking on water. The Fed’s preemptive rate cuts failed to stop inflation from creeping higher, and now they’re stuck. Markets have noticed. The so-called soft landing narrative is breaking down, and with it, confidence in the Fed’s ability to navigate this storm.

Wall Street isn’t waiting around. S&P 500 futures volume has been weak, and the smart money is already heading for the exits. Retail investors, on the other hand, are still clinging to the idea of a second-half recovery. Meanwhile, the same executives who control corporate purse strings are singing a different tune. A growing majority of CFOs now expect a recession in the latter half of 2025. That’s a sharp shift from the optimism just months ago.

Inflation expectations are climbing again, and tariffs are about to add fuel to the fire. Ninety percent of CFOs now say tariffs will drive “resurgent inflation.” The Biden administration has already revived protectionist policies, and Trump, if reelected, could take it even further. Reports suggest copper import tariffs may be implemented within weeks. That’s a problem for an economy already struggling with high costs.

Peter Schiff sounded the alarm on Fox Business, warning that the Fed’s loose monetary policy has already pushed the U.S. into recession territory. With inflation and credit expansion running unchecked, the “strong economy” narrative doesn’t hold up. The Fed’s pause isn’t a sign of confidence. It’s an admission that they have no good options left.

The market’s dead cat bounce may be reaching its end. The rebound highs seem locked in at the 200-day moving average, with the next downside target around 420-425. Wall Street’s biggest players aren’t sticking around to find out what happens next. The only ones left holding the bag are those still believing the fairytale.