Hello there.

Happy Monday! First it was the R-word, now the S-word; whatever’s going on, someone should probably start censoring the broadcasts.

You gotta admire Powell, in a way. He takes a lotta heat. Anyway, out of the frying pan…

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Bank of America just tore up their economic forecasts and started warning about "mild stagflation" for the rest of the year. KPMG's chief economist went further, saying if stagflation actually takes hold, a deep recession might be the only way out. Fun!

For anyone who slept through econ class: stagflation is when prices keep rising, but the economy slows down at the same time. It's an economic catch-22. The scary part is that the Fed's usual playbook doesn't work here. If they cut rates to boost growth, inflation gets worse. But if they raise rates to fight inflation, it’ll tank an already-weakening economy.

The job market lost 92,000 jobs last month, and KPMG notes companies are getting squeezed from both sides: costs are up, so they're raising prices, but they're also getting nervous about hiring. That combo is textbook pre-stagflation behavior. Energy stocks and companies that can pass costs to customers without losing sales are the ones holding up. Everyone else is playing defense.

Inflation clocked in at 2.4% in February, which sounds fine until you remember that higher gas prices haven't even hit the data yet. Forecasters are now predicting inflation could spike to 4.2% this year, way above the Fed's 2% target.

Normally the Fed would raise interest rates to fight this. But Jerome Powell basically said "not this time" during a talk at Harvard. The issue is that this inflation is a supply problem, not a spending problem. The Fed can create money out of thin air, but not crude oil. By the time rate hikes would actually kick in, the oil shock could be over, and they'd just be hurting the economy for no reason.

So the Fed's plan is to sit tight and hope this passes quickly. Traders have basically stopped betting on rate hikes this year. Meanwhile, the job market lost 92,000 jobs last month, and there's growing worry about "stagflation" (prices rising while the economy slows, the worst combo). For anyone with long-term investments, the play is the same as always: short-term noise is just noise. Panic-selling because of a CPI print is usually how people hurt themselves.

Elected officials have had a tremendous amount of success in the market recently.

We want to keep you updated on what they’re trading and when so you can leverage that intel as you plan out your own portfolio.

Remember to always DYOR.

That’s all for today. Write us and let us know your thoughts on the market, the newsletter, or the weather—we’d just love to hear from you.

Till next time,
— Brandon and Blake with Invested Inc.