Hours before the inflation report came out, a team at Bank of America, led by chief investment strategist Michael Hartnett, released an analysis of market conditions, which concluded the bumpy road in the markets has only just begun.

In the inflation report, the cost of living rose 1% in May, with higher gas prices, rents, and food costs all keeping the inflation rate at a 40-year high. Yearly inflation went up from 8.3% to 8.6,% the fastest since 1981. Additionally consumer sentiment sank to a record low in June, according to the University of Michigan study.

In the analysis, they found that the inflation shock hasn’t ended, something confirmed by Friday’s data. In addition, there is an interest rate shock coming that is forming right now, an economic growth shock will come from the interest rate hikes to come, and they found “no release valve from a peak in yields.”

In the analysis they noted a number of spiking prices, such as a 141% rise in natural-gas prices; gasoline rising 91%; wheat, 39%; soybeans, 33%; and corn and cotton, 30% each.

Hartnett said, “We’re in technical recession, but just don’t realize it.” He feels it is a shallow recession based on household and consumer balance sheets, but that “what can turn shallow into deep is the great unknown of the shadow banking system.”

They also note the risk of stagflation, as well as the fact that $54.2 billion were pulled out to cash in the latest weekly data, the biggest pull in the last six weeks, while only $12 billion went to equities.

Their conclusion is there will be a rocky road ahead, and current numbers indicate panicky investors may be beginning to wake up to that fact.