In yesterday's interview, JPMorgan Chase & Co. CEO Jamie Dimon expressed pessimism. "The world may not be prepared for a worst-case scenario of Federal Reserve benchmark interest rates hitting 7% along with stagflation," he stated. "If they are going to have lower volumes and higher rates, there will be stress in the system," Dimon said. "Warren Buffett says you find out who is swimming naked when the tide goes out. That will be the tide going out."
Dimon has repeatedly noted that rates may have to be raised further to combat inflation. According to him, the difference between 5% to 7% will be more painful for the economy than a move from 3% to 5%.
His comments contrast with the prevailing view that the Fed is nearing the end of its tightening cycle, with rates currently at 5.5%, the highest level in 22 years. Last week, US policymakers signaled that rates should remain elevated for longer to curb inflation. However, early this week, some Fed members hinted at the likelihood of another quarter-point interest rate hike.
"If the key rate climbed to 7%, it would have serious implications for American businesses and consumers. Already, economists put the probability of a US recession over the next 12 months at 60% — and that's more optimistic than Bloomberg Economics' prediction of a slump as soon as this year," the CEO of JPMorgan pointed out.
Premarket
Shares of Alcoa, an aluminum producer, fell by 6.1% after the company said that Executive Vice President William Oplinger would succeed Roy Harvey as CEO and president. Oplinger also joined Alcoa's board of directors, the firm added. Today, in the premarket, shares have lost over 1.0%.
US-traded shares of Chinese electric vehicle company Nio slipped by about 2.3%. Losses were sparked by the news that the firm denied media reports that Nio is considering raising capital from investors amounting to up to $3 billion. In today's premarket, shares have lost another 1.2%.
US-traded shares of Li Auto, China's electric vehicle company, also dipped by 10% following the news that Huawei made moves amid increasing competition. At its launch event on Monday, the telecommunications giant presented two new electric cars — its first sedan and a high-end SUV. Notably, Huawei collaborates with an auto manufacturer to sell cars under the Aito brand. Today, in the premarket, the company's stock has slid by another 1.0%.
From a technical point of view, demand for the S&P500 remains weak. Thus, the index is likely to extend weakness. To stop a bear market, bulls need to regain control of $4,332 and $,4357. Consolidation above this area will make it possible to surge to the $4,382 mark. Taking control of $4,405 a task of equal priority for bulls. Its breakout will help restore balance in the market. In case of a decline amid lower risk appetite, buyers must take the lead at around $4,304. If the price breaks through this level, the trading instrument will come back to $4,255 and probably $4,205.
