June 3, 2023
From “hurricane” to “unprecedented shocks”: Warnings from Musk and executives at major banks about the economy

From “hurricane” to “unprecedented shocks”: Warnings from Musk and executives at major banks about the economy

And the past sessions were marked by statements by senior executives that shook the stock market, especially the American one, amid very negative rhetoric about the future of the economy.

Last Wednesday night (1), Jamie Dimon, CEO of JPMorgan Chase, She warned that it was preparing America’s largest bank for an “economic hurricane.” He advised investors to do the same.

Dimon said there is an “economic hurricane brewing” and the economy faces uncertainty, in part because the unprecedented stimulus continues to play its part.

For example, he said, the war in Ukraine continues to move commodity markets and could push oil prices above $150 a barrel. “This hurricane is right there on the road heading our way,” Damon said. “We don’t know if it’s a little storm or a super storm Sandy. You have to prepare.”

Dimon also said the data is heavily distorted by the effects of inflation and changing consumer spending patterns on goods and services.

Then, John Waldron, president and chief operating officer of Goldman Sachs, also warned of difficult times ahead amid a series of “unprecedented” shocks that continue to destabilize the global economy. “This is one of the most – if not the most – complex and dynamic environments I’ve seen in my career,” he said Thursday, adding: “The convergence of the number of shocks for me is unprecedented.”

Waldron said he would not use any weather measurement, but stressed that there are a number of accompanying factors that are hurting the economy, from a commodity shock to a series of monetary and fiscal stimulus.

Despite the challenges, the CEO said, the bank is confident of achieving all of its performance targets and continues to search for acquisition opportunities in the wealth and wealth management field, seeking to diversify its sources of income. However, he noted that the institution is more cautious with regard to capital spending, given the current macro environment.

Jane Fraser, chief executive of Citigroup, indicated at an investor conference that the United States would struggle to avoid a recession. “Surely a recession in Europe looks more likely than what we see in the United States,” he said. But even in the US, a recession is “not easy to avoid”.

‘Feeling very bad’

This Friday (3), even before the release of US employment data for May, Elon Musk, CEO of Tesla (TSLA34) was already shaking up the markets.

Musk, in an email to company executives seen by Reuters, said he had a “very bad feeling” about the economy and that It needs to cut about 10% of jobs in the electric car maker.

The letter, sent Thursday titled “Pause for All Employment Worldwide,” came two days after Musk called on employees to return to the workplace or resign.

Nearly 100,000 people were employed by Tesla and its subsidiaries at the end of 2021, according to the company’s annual filing with the US Securities and Exchange Commission (or so-called SEC).

Musk has warned in recent weeks about the risks of a recession, but his email ordering a hiring freeze and staff cut was the most direct message from the head of an automaker.

So far, demand for Tesla cars and other electric vehicles has remained strong and many traditional indicators of a slowdown have not materialized, including rising US dealer inventories.

“Much’s bad feeling is shared by a lot of people,” Carsten Brzeski, global head of macroeconomic research at Dutch bank ING bank, told Reuters. But he wondered: “We are not talking about a global recession. We expect the global economy to calm down at the end of the year. The United States will slow down, while China and Europe will not recover.”

This Friday, after Disclosure of the employment report (payroll) dAnd in May with higher-than-expected job creation, US President Joe Biden spoke sarcastically at a press conference about the businessman’s “very bad feeling” about the economy.

“Good luck on your trip to the moon,” said the US president.

Biden said May’s data came in “excellent” and shows the US can Fight inflation without sacrifices. According to him, the US economy is in a position of strength and is in a better position to combat inflation than any other country.

“The US economy could grow faster than China this year,” Biden said during the press conference.

However, the US head of state commented on the importance of Congress passing measures to combat inflationary pressures, such as passing tax cuts on clean energy. “Fighting inflation remains my priority. I will do everything in my power to minimize the effects on American families,” he reiterated.

Employment data came in higher than expected, but US stock markets are seeing a day of decline, with the perception that the figure (showing 390K job creation, compared to Refinitiv consensus forecast of 32K) could weigh on the future. Federal Reserve decisions on the interest rate, which prompted the monetary authority to accelerate the upward cycle.

Assets’ reaction to US employment data reflects a perception that there may be room to continue to aggressively tackle inflation, after recession fears raised bets that the Fed’s tightening cycle in recent years may stall.

On the other hand, there was stability in the US unemployment rate at 3.6% – against expectations for a decrease to 3.5% – and a less-than-expected rise in US wage growth (from 0.3% m/m, compared to a forecast of 0.4%) as a counterpoint to the strong jobs reading. vacant created, as it may justify a slowdown in Fed tightening.

(with Reuters and Estadão content))

Buying opportunity? XP Strategist reveals 6 cheap stocks to buy today. Watch here.