All articles tagged with #recession warning
JPMorgan Chase CEO Jamie Dimon warned of potential economic deterioration in the US, citing waning stimulus effects, cautious sentiment, and risky private credit markets, while stock markets responded positively to trade talks and inflation data.
JPMorgan's Marko Kolanovic, the firm's chief market strategist, is warning of a potential 20% market plunge in the S&P 500 due to high interest rates. He suggests that investors consider holding cash as a protection strategy. Kolanovic believes that staying at the current level of interest rates could lead to a recession. While he doesn't anticipate an immediate sharp pullback, he warns that the "Magnificent Seven" stocks, including Apple, Amazon, Meta, Alphabet, Nvidia, Tesla, and Microsoft, are particularly vulnerable to steep losses. Kolanovic also highlights the stress on consumers, citing delinquencies in credit cards and auto loans.
The yield curve, which has been signaling a recession since last year, is now sending its strongest warning since the early 1980s. However, some investors believe that the Federal Reserve will be able to control inflation and avoid a deep downturn. The stock market has rallied and the economy has remained resilient, leading analysts and investors to question the predictive power of the yield curve. The U.S. economy is slowing but remains on solid ground, even after a significant increase in interest rates. While the yield curve has historically been a reliable indicator, some argue that the current economic conditions, such as recovering from a pandemic and low unemployment, are unique and may not lead to a recession.
The Federal Reserve's preferred bond market signal of an upcoming recession has plunged to fresh lows, standing at nearly minus 170 basis points on Thursday. The spread, which has been in negative territory since November, is the most reliable bond market signal of an imminent economic contraction. The curve inversion, known as "Powell's curve," has been plunging to fresh century lows, bolstering the case for those who believe the central bank will soon need to cut rates in order to revive economic activity.