From “hurricane” to “unprecedented shocks”: Musk and JPMorgan and Goldman executives’ warnings about the economy

The last sessions were marked by statements by important executives that shook the stock market, especially the American one, amid very negative speeches about the future of the economy.

On Wednesday night (1), Jamie Dimon, CEO of JPMorgan Chase, warned that he is preparing the largest US bank for an “economic hurricane” and advised investors to do the same.

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

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

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

Following this, John Waldron, president and COO (chief operating officer) of Goldman Sachs, also warned of more difficult times ahead amid a series of “unprecedented” shocks that continue to shake the global economy. “This is one of the most – if not the most – complex and dynamic environments I have 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 analogy, but stressed that there are a number of concomitant factors hurting the economy, from a commodity shock to a slew of monetary and fiscal stimulus.

Despite the challenges, the executive said that the bank is confident in achieving all of its performance targets and continues to seek acquisition opportunities in the wealth and wealth management area, seeking to diversify its revenue stream. Still, he pointed out that the institution is more cautious with capital spending, given the current macro environment.

“Super bad feeling”

Finally, this Friday (3), even before the release of US employment data for May, a speech by Elon Musk, CEO of Tesla (TSLA34) was already shaking the markets.

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

The message, sent on Thursday and titled “Pause All Hiring Worldwide,” came two days after Musk told 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 the so-called SEC).

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

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

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

This Friday, after the release of the May Employment Report (payroll) with higher-than-expected job creation, Joe Biden, US president, spoke ironically at a press conference about the businessman’s “super bad feeling” about the economy.

“Best of luck on your trip to the moon,” said the American president.

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

“The US economy could grow faster than China’s 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 pressure, such as passing clean energy tax cuts. “Fighting inflation remains my priority. I will do everything possible to lessen the impacts on American families,” he reiterated.

The employment data came higher than expected, but the American stock markets have a day of decline, with the perception that the number (showing the creation of 390 thousand jobs, compared to the expectation of the Refinitiv consensus of 325 thousand) could weigh on future decisions of the Federal Reserve on the interest rate, causing the monetary authority to accelerate the upward cycle.

Assets’ reaction to U.S. employment data thus reflected a perception that there may be room to continue tackling inflation aggressively, after recession fears raised bets on a possible pause in the Fed’s tightening cycle in recent years. weeks.

On the other hand, there was stability in the US unemployment rate at 3.6% – against expectations of a drop to 3.5% – and a smaller-than-expected rise in the growth of US wages (from 0.3% in the monthly basis, compared to a projection of 0.4%) as a counterpoint to the robust reading of vacancies created, as they may justify a deceleration in the Fed’s tightening.

(with Reuters and Estadão Content))

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