The recession signals are present. Inflation, and the current war are acting as fuel for the possible recession. Even major banks and institutions, and especially U.S. banks are transparently sharing their sentiment towards the current global economic situation.
JP Morgan CEO Jamie Dimon has warned investors more than once now, against the possibility of an upcoming economic hurricane. He also says that this time can be different that other times, since this recession might present various challenges, saying the next economic hurricane will result from a combination of tough monetary policy and Russia's sudden invasion of Ukraine.
Dimon said the Fed's decision to reduce its holdings under the quantitative easing program, which in other words means reducing their assets in the balance sheet, is one of the main reasons for the economic hurricane.
The optimistic yet pessimistic CEO expressed deep concerns about the war between Russia and Ukraine and its far-reaching repercussions, which as we said might be the fuel that will feed the fire of stagnation.
What surprises us the fact that Dimon’s tone is much different than before, he now seems more convinced, and more certain that this hurricane is coming and coming in fast.
At the same time, the Bank's CEO urged investors to prepare for the upcoming turmoil, especially as the U.S. economy looms large, although for the time being, things are going well, and everyone believes the Fed can handle it.
This is the phase where the U.S. Administration always tries to step in in many different forms. Let us discuss a bit those types of forms. Last week we had the OPEC+ meeting whereby the production of Oil witnessed an increase to reach approximately 649,000 barrels per day. We saw oil prices surging and in specific the WTI reached $120/barrel.
This instantly triggered president Biden to have a speech at the end of the week to assure the U.S. citizens that the economy is doing well, and that OPEC+ should have increased production by even more given the current shortage of energy products globally due to the war.
Obviously, the federal reserve cannot face the citizens and tell them that a recession might be coming, the bets thing they can do at the moment is monitor the inflation rates against their aggressive rate hikes.
The content published above has been prepared by CFI for informational purposes only and should not be considered as investment advice. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell. The information provided does not have regard to the specific investment objectives, financial situation, and needs of any specific person who may receive it, and is not held out as independent investment research and may have been acted upon by persons connected with CFI. Market data is derived from independent sources believed to be reliable, however, CFI makes no guarantee of its accuracy or completeness, and accepts no responsibility for any consequence of its use by recipients.