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The Fed is disregarding this recent record spike of inflation calling (or better yet hoping) it's transitory. A key excuse they use is used car prices as a key transitory component to the jump. But used car prices are up in part because of limited new car production due to lack of semiconductor supply. Semiconductor companies though say that lack of supply is not so transitory.

There are many near-term drivers to inflation and the Fed at max bond-buying and record low-interest rates in a booming economy is probably the biggest risk for inflation to get out of hand. This is probably as extreme an opposite posture to their normal stance in history. Normally in a boom, they'd start to back off. They are not.

If inflation continues to accelerate I believe strongly there will be a blink-blink moment by the Fed where they'll have to slam on the brakes. That will likely crush markets.

Look at the Dallas Fed's President's description of that possibility he explained this week,

"Mr. Kaplan, reiterating a view he has held for some time, said, “I’ve been more of a fan of doing some things, maybe, to take our foot gently off the accelerator sooner rather than later so that we can manage these risks” around the recovery process, in a bid to “avoid having to press the brakes down the road” with a more abrupt shift in monetary policy."

I believe the risk is larger than the market is assessing that the Fed will have to "press the brakes down the road" especially with the continuation of these inflation numbers.

All we probably need are a few more high CPI and inflation prints and the Fed will have to reconsider their "transitory" posture which has important implications to stock prices.