Fed Rate Hikes Raise Risk of Recession and Crisis Within Two Years

The Fed's interest rate hikes and yield curve inversions historically precede recessions and crisis events by 10-24 months due to lag effects.

The economy is currently at unprecedented levels of leverage, making it vulnerable to tighter financial conditions.

Higher interest rates negatively impact highly leveraged consumers, businesses, markets, and government deficits.

Valuations are likely too high given elevated inflation, shrinking profit margins, and rising rates.

While timing is uncertain, the risk of the Fed triggering a crisis event seems high given vulnerable economic fundamentals.