02/06/2022
According to Jamie Dimon, the CEO of JPMorgan, the US economy is facing a hurricane.
Totally other words than just a week ago when the market got all excited and started rallying after the FED minutes and Bostic's words which indicated that the FED was going to do another 2 hikes of each 50 bps and then take a break in September.
However soon after Janet Yellen stated that she was wrong about the path of the inflation and also Waller of the FED said that the FED was not going to stop hiking the rates until they had got their inflation under control.
Also, Bostic started retracing the unfortunate remarks made earlier and the bulls lost their appetite.
Of course, we would mostly have seen a speedy rise in the market without the FED minutes anyway, as the market was heavily over-sold last week and the bears needed a break. Also, we have in previous larger drops experienced these pull-backs before the next drop.
Whether we are going to see lower levels than we did last week, is not certain but it is likely that we at least should revisit the lows of last week, as the liquidity which is low anyway, should drop even further when the retailers which got too excited last week start closing positions.
Lower levels of course would be possible, should the US go into a recession. Something which now most agree is inevitable, the big question is just how big a recession we will see.
If the market would now turn to the upside and continue being optimistic, then people will start making more money and get more positive and then start spending money, which then would further push the inflation higher. That would then lead to the FED would need to tighten its policies even further to stop the inflation, even possibly increasing the interest rates even further. So it would somehow be a short-lived optimism.
As Warren Buffet said then the market is more and more starting to look like a gamble more than it resembles trading. The blame goes to the retailers with cash but little or no experience.
