Should Investors Be Worried About Higher Inflation & Rising Interest Rates?

By Ken Mahoney, President - Mahoney Asset Management
 
Huge amounts of fiscal stimulus have been injected into the US economy since the start of the pandemic, increasing the US national debt ‘bomb’ to $28 trillion. The reason this ‘bomb’ has not detonated is mainly because interest rates are so low, but as the economy reopens and inflation rises any tapering from the Federal Reserve would cause a ‘tantrum’ of such, having profound effects on the US and global markets.
We believe the US stock market has been in a two-act play as of late, the first act being made up of largely positive news surrounding vaccinations, lower Covid-19 cases, and massive fiscal stimulus, all of which have benefitted the market and investor sentiment.
 
Now comes the second act, which is higher income, corporate, and capital gains taxes combined with more regulation, and it is just a matter of time before all of that is implemented. However, one factor investors may not have priced-in as much is infl...