Jamie Dimon's 61 page annual shareholder letter is finally out for FY2023!
-A rate spike is very possible with stickier inflation. Interest rates could soar to 8% -Says Federal deficit is a real issue hurting business confidence (govt spending could keep rates high) -US economy resilient so far with consumer spending, but the economy has also been fueled by government deficit spending and past stimulus -Market is pricing in 70-80% chance of a soft landing/no landing...Dimon thinks that is too high -Inflation resurgence, political polarization are risks for this year (Ukraine, Middle East, China) - AI may be as impactful on humanity as the printing press Source: SpecialSitsNews, Barchart
Global PMIs recovering nicely.
Source: Markets & Mayhem reposted Ayesha Tariq
The volatility index, $VIX, spiked 23% this week, the largest weekly jump since September 2023.
It also marked the highest weekly $VIX close since November 2023. Meanwhile, the Dow posted its worst week of 2024 so far. This week, we will receive crucial inflation data including CPI and PPI inflation. If CPI inflation rises again, it will mark the 3rd straight monthly increase in inflation. Will the VIX continue to increase? Source: Bloomberg, The Kobeissi Letter
US inflation has officially been at 3% or higher for exactly 3 years.
The Average American is now paying nearly 40% MORE for groceries than what they were paying in 2019. Over 100 food items have seen inflation above 50% since 2019...
The week ahead...
Source: Syz Group
Mind the gap:
Gold has hit fresh ATH despite a rise in US real yields. At current 2% 10y real rate, Gold at $2,300/oz is ~$270/oz expensive, Jefferies has calculated. There are fundamental reasons: Increased government spending & indications of a willingness to accept higher inflation Source: HolgerZ, Bloomberg
NOTHING NEW FROM POWELL YESTERDAY...
Fed Chairman Powell reiterated the Federal Reserve's cautious stance on interest-rate cuts, stating that they would wait and observe before making any decisions. While Powell didn't introduce any significant changes, his comment provided relief to Wall Street by suggesting that recent inflation data hadn't substantially altered the overall economic outlook. He also reiterated the likelihood of rate reductions at some point during the year. “On inflation, it is too soon to say whether the recent readings represent more than just a bump,” Mr. Powell stated. “We do not expect that it will be appropriate to lower our policy hashtag#rate until we have greater confidence that inflation is moving sustainably down toward 2 percent.” At the same time, he said that cuts to the benchmark federal funds rate are “likely to be appropriate at some point this year” as he does not believe “inflation is reversing higher.”
Eurozone inflation cools, setting stage for June rate cut:
Headline CPI slowed to 2.4% YoY in March from 2.6% in February below consensus forecast of 2.5%. Core CPI slowed to 2.9% from 3.1%, again below economists' expectations to reach lowest level in >2yrs. But there were signs that inflationary pressures have yet to ease in labor-intensive parts: Service Price inflation +4.0% YoY, unch from 4 preceding mths. (via DJ, Bloomberg thru HolgerZ).
