Sizzling inflation, frazzled Americans, and an aggressive Fed walk into a bar — and everyone and their uncles seem to have an opinion on what happens next.
(Hint: Most of the punchlines aren’t very funny.)
I’m Phil Rosen, and today I’m breaking down why one top Wall Street firm adjusted their economic forecast after yesterday’s new inflation data, and is now expecting ato hit sooner rather than later.
Plus, if you didn’t see it yesterday, Insider is seeking nominations for its new series, 100 People Transforming Business — take a gander.
Without a moment to spare…
1. Bank of America said a mild US recession will arrive this year. Americans are getting bogged down by a so-called “inflation tax,” analysts wrote in a Wednesday note, and it’s weighing on spending power as consumers spend less on goods and services.
Before yesterday, the bank had predicted a growth recession, where the US would avoid an outright contraction of the economy. But BofA swiftly adjusted course the same day new government data was published.
Yesterday, June’s consumer price index clocked in at 9.1%, above the expected 8.8%, and the bank said broader economic momentum is slowing as financial conditions tighten.
“The Fed has communicated its desire to restore price stability and a willingness to accept at least some pain in labor markets in the process,” BofA analysts wrote.
But the slowdown isn’t just coming for the US — the IMF is gearing up to slash its global growth forecasts for the second time in three months as inflation, China’s COVID lockdowns, and war in Ukraine hammer economies.
In her words: “It’s going to be a tough 2022 — and even possibly a tougher 2023, with increased risk of recession.”
2. US stock futures fell early Thursday, after Wednesday’s consumer price data hardened expectations of more aggressive interest rate hikes. Here are the latest market moves.
3. Big banks are on deck today: JPMorgan Chase, Morgan Stanley, First Republic Bank, and more, all reporting. Plus, look out for the unemployment insurance weekly claims report, expected from the US Department of Labor this morning.
4. Top Wall Street firms agree that stocks are set to rally in the second half of the year, but their forecasts vary wildly. JPMorgan, Goldman Sachs, Morgan Stanley, and others all have predictions for the rest of 2022. See what the heavyweights expect to happen next — and how they say to invest.
5. “Rich Dad Poor Dad” author Robert Kiyosaki said he’s itching to buy cheap bitcoin and real estate in the current market. He’s celebrating the market slump as a sale on key assets, and noted that he’s got cash on hand to scoop up bargains — and he’s recommending other investors do the same.
6. Wharton’s Jeremy Siegel thinks the US economy is past the peak of inflation. However, Siegel said the Fed needs to be very careful in order to prevent an economic slowdown. Here’s why he still expects the Fed to hike rates by another 75-basis points this month.
7. An economist explained how the euro could drop below the dollar after the world’s top currencies hit parity this week. The Boston College professor said the European Central Bank may not actually move to stop the decline: “I think the ECB is really not in any hurry to raise the euro, and it will let the export sector — including tourism — benefit from the current situation.”
8. A blockchain founder who’s nailed bitcoin’s tops and bottoms just shared new price targets for it and ethereum. He’s advising to wait for the actual bottom, which could be much steeper than previous bear markets. These are the four key things investors should know to navigate the digital asset winter.
9. US stocks are trading at historically cheap prices, according to Morningstar, and investors should be “adding judiciously” while they can get shares at a discount. Here are the 33 best undervalued companies to buy in the second half of 2022.
10. Here’s a look at the historic level the Consumer Price Index just hit on Wednesday. It accelerated at its fastest rate since 1981, and the reading came in above expectations. Read the full report on what the numbers tell us about the state of the economy.