For the past two years, there has been a fear in the market that the Federal Reserve’s frequent rate hikes would send the US economy into recession, but so far there is little evidence of that.
– The American economy is incredible and has been booming for a while. So far, the economy seems to be headed for a kind of soft landing, but there I am on the cautious side, said JP Morgan CEO Jamie Dimon according to the Financial Times in an interview at the Economic Club of New York.
He went on to bring up a saying from his early days on Wall Street.
– The markets will do anything to harm as many people as possible. This could be one of those cases, continued Dimon, who in a CNBC interview in late February characterized a recession as more than 50 percent likely.
Fed raising interest rates?
At the time, Dimon’s like-minded colleague at Goldman Sachs, David Solomon, also warned investors against getting too strong in the belief that the Fed is steering towards a soft landing. He had then become more pessimistic about the development of the US economy compared to his statements in September that “the chances of a soft landing are now significantly higher.”
The market had long hoped that the Fed would start interest rate cuts in the summer, and in early 2024, 6-7 interest rate cuts were priced in in the US this year. But US inflation has continued to surprise on the upside, and last week UBS warned that it should now prepare for the Fed to raise interest rates rather than cut them.
The oil surprises
Furthermore, JP Morgan CEO Dimon expressed surprise on Tuesday that the geopolitical situation in the Middle East has not sent oil prices higher than current levels. The front contract for Brent oil stands at USD 88.60 per barrel on Wednesday. barrel.
– I am a little surprised that things have not gotten worse for oil and gas. It won’t take much to send oil and gas prices back to $120 or higher, he said, according to the Financial Times, pointing to the risk of attacks on energy infrastructure.
