text: According to an announcement from Republicans on the House Committee on Ways and Means Committee, Americans expect a 6% rate of inflation a year from now. Additionally, Republicans pointed out that each family in America “has lost about $377 a month, or three years of real wage growth, under President Biden.” This translates into an additional $3,500 required to maintain the same standard of living for goods and services they did in 2019 or 2020. – T.W.Gundlach: 2022 flashing recession signalDoubleLine’s Jeff Gundlach said in an interview that “the yield curve is sending a bona fide recessionary signal.” He added that a yield curve showing interest rates going up on the short end of the curve while going down at the long end of the curve should be watched closely by investors. Gundlach said that most economists believe inflation will come back down to 2% by 2023, but he doesn’t necessarily agree with that. “I think it’s highly dependent, like everything, on government policy. I think the Fed only has to raise the rate four times, and you’re going to start seeing a plethora of recessionary signals. I think there is certainly a non-zero possibility that you get a recession in the latter part of 2022.” (AC: An inverted yield curve is one of the most accurate indicators for predicting a financial recession. Investors will put more money into short-term debt instruments when short-term yields begin to outpace long-term yields. This drives the price of stocks down, and over time would increase the price of long-term debt instruments. Similar to the Great Recession in 2007-2009, the yield curve was inverted for most of 2006. As markets started to crash, long-term debt instruments began to increase in yield, settling at levels above the returns you could expect in the stock market. – T.W.)Cathie Wood’s economic updateIn a video interview, ARK CEO Cathie Wood commented on China, pointing out issues she found surprising that had been reported in less than a week, namely Evergrande defaulting on bonds and having to demolish 39 buildings due to a lack of permits. According to Wood, this kind of economic instability in the United States would elicit a much stronger reaction from consumers. Wood said that “when China catches a cold, commodities usually catch pneumonia. We’re seeing this in a few commodities, iron ore prices, and so forth, but it isn’t quite clear cut yet, and I was telling my team this morning: how could this be happening and the economy not be falling apart and the consumer not getting restless?”(AC: Cathie Wood fits appropriately among the opinion of other large-scale investors that we may see a recession this year. When speaking on inflation, Wood is quite the contrarian. She has maintained that we will likely enter a deflationary period and considers this scenario far more likely than sustained inflation. Wood thinks that inflation will worsen throughout the first half of this year before her deflationary prediction begins to play out. According to Wood, deflation will emerge once inflation falls from supply chain improvements and technology continues to push the prices of goods and services down throughout the year. – T.W.)