Market Update | June 6, 2022

Some of Wall Street’s top bank executives gave their views on the business climate last week. Making headlines was JPMorgan Chase CEO Jamie Dimon, who said that a “hurricane is right out there, down the road, coming our way,” referring to his economic outlook. Similarly, regional bank PNC CEO Bill Demchak said, “Inflation is persistent, I think more persistent than the market thinks and than the Fed thinks. I don’t see any possible outcome other than a recession.”

Meanwhile, the financial press also made headlines out of Tesla’s CEO Elon Musk’s viewpoint on the economy. Although it is nothing unusual for Musk to be in the headlines, his latest remarks coincide with those from Dimon and Demchak. Musk sent an email to Tesla executives saying he had a “super bad feeling” about the economy and called for job cuts.

An entire essay could be written about the conditions that have led these executives to their conclusions. To be succinct, I’d like to borrow an analogy made last week by Morgan Stanley co-President Ted Pick: it’s a matter of fire and ice. Markets are grappling with two forces – concern over inflation, or “fire,” and recession, or “ice.” The Federal Reserve is trying to put out the fire without freezing things over.

I believe this will be difficult to do. As it relates to the financial markets, the challenging, topsy-turvy market action could continue for a while. We will continue using this period as an opportunity to make sure your portfolio is tailored to your unique goals. Let us know if we can do anything for you.

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