Financial Markets Declining As The Fed's COVID Chickens Come Home To Roost

This is what reality setting in looks like.

Just as the Dow soared as the Fed flooded the markets with magically created dollars in response to the pandemic, the Dow nosedives when the Fed gets serious about taking those dollars back.

Stocks have fallen sharply so far this year as the market readies for the Fed to raise interest rates to try to tame inflation, which is at its highest level in nearly four decades. The central bank has kept short-term rates near zero since the pandemic hit the global economy in 2020.

The Fed's COVID chickens are coming home to roost. Just as China learned last year in real estate, just as the Fed should have learned in 2006-2008, bubbles, while easy to inflate, are not easily deflated.