Will the Fed’s Inflation Cure Trigger a Hard Landing?

In our post pandemic economy, all eyes are on the Federal Reserve and the tools at its disposal to unwind the effects of the unprecedented Covid-era stimulus. Fed Chairman Jerome Powell and his cohort face a formidable challenge as they try to cure one economic ill (high inflation) and prevent another (recession) when the treatment for one is contraindicated for the other.

For now, Powell has made his choice: fight inflation by raising interest rates and reducing the emergency-sized Fed balance sheet to intentionally slow the economy and inhibit consumer demand. In effect, the Fed is administering high doses of inflationary chemotherapy while trying to avoid the significant side effect of a ravaged economy. As Powell put it in a July 27 press conference, “We’re trying to do just the right amount, right? We’re not trying to have a recession. And we don’t think we have to.”

What are the odds of this approach working? Historically, the Fed’s success rate in fighting inflation while avoiding a recessionary “hard landing” has been mixed. The Wall Street Journalfound that of the previous 11 battles the Fed has fought against inflation, six produced “soft landings,” where inflation and economic growth were reduced without causing a recession.

So it is possible. But interest rates are rising at the fastest pace in U.S. history. Add to that the slowdown in GDP growth, record debt, and rising geopolitical tensions, and a recession is looking dramatically more certain. Bloomberg estimates a 100% chance of one within the next 12 months.

If inevitable, a modified bright side of a recession in 2023 is that stock markets tend to bottom out ahead of recessions. Equity markets are forward-looking indicators, which means that often the worst-case scenario is priced in ahead of time. From peak to trough, the median S&P 500 drop during recessions since 1948 is around 24%—which is comparable to the lows set thus far in 2022. The S&P 500 average decline during the past nine recessions was -1.5%, and in four instances it actually generated positive returns. Timing a market bottom is nearly impossible, but by the time the doomsday scenario arrives, equities may already be headed higher.

As the market continually digests new information, it is easy for clients to lose track of the bigger picture. As ever, during volatile markets we recommend that investors avoid trying to time the market and emotional responses to short-term volatility. We advise patience and a return to investment principles such as long-term thinking, diversification, and taking advantage of market conditions to selectively tax-loss harvest and rebalance.

Klaus Busse would like you to close your eyes and imagine yourself behind the wheel of a Maserati. Picture the GranTurismo, which launched in Australia in 2024. Where do you see yourself? Chances are, Busse suggests, it’s not during the school pick-up or commuting to the office.

“You’re probably on a wonderful road in Tuscany, or Highway 1, or you’re going to a red carpet event,” says Busse, who holds the enviable title of Head of Design at Maserati, the iconic Italian car manufacturer. “Basically, it’s about emotion.”

At the luxury end of the market, the GranTurismo Coupe—priced between $375,000 and $450,000—is designed to transform the driving experience into something extraordinary. For Busse and his team, these “sculptures on wheels” are not just status symbols or exhilarating machines but expressions of pure joy. Their mission is to encapsulate that feeling and translate it into their cars.

“I really feel the responsibility to create emotion,” he says. “We have a wonderful word in Italy: allegria, which is best translated as ‘joyful.’ Our job as a brand is to lift you into this area of joy, perfectly positioned just short of ecstasy. It’s that tingling sensation you feel in your body when you drive the car.”

Even as 60 percent of the world’s population now lives in urban areas, Maserati’s design ethos captures the essence of “everyday exceptional.” Whether navigating city streets or open roads, a Maserati turns heads without being ostentatious or aggressive. “I’ve driven these cars all over the world, and no matter where I go, people smile at me and give a thumbs-up,” says Busse.

Since joining Maserati in 2015, Busse has reimagined and redefined the brand, steering his team through the reinvention of classic models and the transition to electric vehicles. Iconic designs like the Fiat 500, which entered the EV market in 2020, serve as a testament to Maserati’s ability to blend tradition with innovation.

Unlike other luxury car brands, Maserati embraces radical change with new designs every 10 to 15 years. Busse loves connecting with fans who follow the brand closely. He explains that each Maserati model reflects a specific era, from the elegant 35GT of the 1950s to the wedge-shaped designs of the 1970s and the bold aesthetics of the 1980s.

“I often ask fans, ‘What is Maserati for you?’ because their responses tell me so much about how they connect with the brand,” he shares.

Inspired by legendary Italian designer Giorgetto Giugiaro, Busse balances tradition with modernity in his designs. As Giugiaro once told him, “We always do the best in the moment.” This philosophy resonates deeply with Busse, who believes in honouring the past while embracing future possibilities.

Through advances in technology, techniques, and societal trends, Busse ensures Maserati remains at the forefront of automotive design. For him, the creative process is more than just a job—it’s a way to create joy, connection, and timeless elegance.

Will the Fed’s Inflation Cure Trigger a Hard Landing?

Ever wondered what it takes to create a car like the Maserati? Meet the German designer taking on an Italian icon.