Howdy readers. I'm senior reporter Phil Rosen, writing to you from New York.
Today, we're diving into insights from one of Wall Street's most vocal executives.
He gave his two cents on the current state of the economy and its trajectory, as well as a sobering take on the digital asset sector in the wake of FTX's implosion.
1. There are few top executives who draw as much attention and speak as freely as Jamie Dimon, the CEO of JPMorgan.
In comments shared on CNBC Tuesday, the Wall Street luminary gave a bleak prognosis of the economy in the year ahead as the Federal Reserve carries out its aggressive monetary policy tightening campaign.
Recent signals from Fed Chair Jerome Powell and other central bank officials has left Dimon expecting them to raise benchmark rates higher than markets are expecting, and then hold it there for three to six months.
But even that, he warned, may not be sufficient to cool inflation.
That forecast comes as huge sums of residual pandemic savings have been propping up consumer spending, trillions of dollars worth in Dimon's estimation, though that may not last much longer.
"Inflation is eroding everything…and that $1.5 trillion will run out sometime mid-year next year," Dimon said. "So when you're looking out forward, those things may very well derail the economy, and cause this mild-to-hard recession that people are worried about."
The Fed's quantitative tightening campaign, too, poses another economic risk, the JPMorgan chief said.
That, he said, combined with persistent and stubborn inflation as well as geopolitical tensions could exacerbate oil, food, and humanitarian crises.
"We've not had a war in Europe like this since 1945, and back then we said never again," he said. "Add to that by the way, a lot of emerging market countries that a lot of people don't focus on are going to pay a heavy price to the strong dollar, higher rates, and higher oil prices…I don't think we've seen that kind of turmoil in the global world in a long time."
Never one to mince words, Dimon then blasted the cryptocurrency sector when asked what he thought of the FTX collapse.
In his view, the media has given the implosion too much attention.
Dimon, who has long been a crypto skeptic, clarified that he's not necessarily pessimistic on blockchain or smart contract technology, but certain assets simply look useless to him.
"I think crypto is a complete sideshow," Dimon said. "Crypto tokens are like pet rocks."
What's your first reaction to Jamie Dimon's comments?
In other news:
2. US stock futures fall early Wednesday, as investors appear to lose hope that the Fed will be able to pull off a soft landing for the economy. Meanwhile, days after the EU's $60 per barrel price cap kicked in, oil prices slumped to levels not seen since before the invasion of Ukraine. Here are the latest market moves.
3. Earnings on deck: Campbell Soup, Gamestop, and Descartes Systems Group, all reporting.
4. These stocks are set to outperform in a recession-free economy. Between risky hedge funds and high-fee mutual funds, this group of companies are shared favorites to beat the market in the new year. See Goldman Sachs' full list of names to invest in.
5. Goldman Sachs also plans to spend millions on crypto-related investments even after the sector's so-called Lehman moment. The bank's head of digital assets told Reuters: "We have seen more client interest since the demise of FTX."
6. Investors should expect Chinese stocks to rally hard now that Beijing has set a clear path to reopening, according to Morgan Stanley strategists. The Wall Street firm upgraded its outlook for China equities and expects the easing of zero-COVID controls to bode well for markets. Already, major cities like Shanghai and Shenzhen have eased lockdown measures.
7. It'll take months for the real impact on Russian oil from the EU price cap to feed through. There's been much debate about how the measure will alter oil prices moving forward — but PIMCO commodities strategist Greg Sharenow said it's going to come down to three factors.
8. These five charts show why now is a good time to invest in bonds. They look the most attractive relative to stocks in years, as yields are up and stocks are tanking. Get the full details.
9. Zelman & Associates called the housing market's downturn long before it started. Too many homes were being built and prices were too high even before mortgage rates soared. The group's homebuilding expert explained why the current slump could last for several years.
10. Lumber prices hit their lowest level since 2020. US housing market activity continues to slow down, and the average 30-year mortgage rate is sitting at 6.5%. Dig into the numbers behind the commodity's slump.
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