Coffee With Greta: Recession Fears Grip Wall Street
DJIA Futures: -39 (-0.1%)
SPX Futures: -1 (-0.02%)
NASDAQ Futures: +12 (+0.1%)
Good morning friends!
Futures are flat as traders remain on edge following Monday’s rout.
Let’s get right to it!
October Trade Deficit Jumps Less Than Expected
The U.S. trade deficit rose less than expected in October.
The Commerce Department reported that gap jumped 5.4% to $78.2 billion.
That was lower than economists’ expectations for the deficit to rise to $80 billion.
Exports fell 0.7% while imports rose 0.6%.
Jamie Dimon Predicts Recession in Mid-2023
JPMorgan Chase (JPM) CEO Jamie Dimon is expecting inflation to push the U.S. economy into a recession next year.
In an interview with CNBC this morning, Dimon said consumers are currently in good shape with $1.5 trillion in excess savings from pandemic stimulus.
Currently, consumers are spending 10% more than they did in 2021.
But Dimon said, “Inflation is eroding everything I just said, and that trillion and a half dollars will run out sometime mid year next year.”
He predicted that “may very well derail the economy and cause a mild or hard recession that people worry about.”
United CEO Warns of Business Travel Slowing
United Airlines (UAL) CEO Scott Kirby told CNBC today that business travel demand has “plateaued”.
But Kirby said revenue is still rising thanks to strong demand for leisure travel and capacity restraints keeping prices high.
He said, “It feels like business travel, and this probably is indicative of pre-recessionary kind of behavior, has plateaued even though our total revenues are still going up.”
Kirby said the airline’s data currently shows no signs of a recession, but they are forecasting a “mild recession induced by the Fed.”
Traders Anticipate Rate Hike Pivot
CME Group’s FedWatch Tool shows more traders are expecting the Fed to pivot to a smaller rate hike next week.
That tool shows 79.4% now anticipating a 50 basis point move with 20.6% expecting another 75 basis point hike.
That prediction comes despite the release of hot economic data in recent days, including the November jobs report.
The Fed Chair said earlier this month that it may be appropriate to start slowing the pace of rate hikes at the December meeting.
But he also warned they still have a long way to go to reach price stability.
Oil Prices Fall On U.S. Dollar Strength, Recession Fears
Oil prices are lower this morning as the U.S. dollar continues to strengthen and economic fears grip the market.
West Texas Intermediate crude futures are down 1.5% to $75.75 bbl while Brent crude futures are down 1.5% to $81.50 bbl.
Both contracts recorded their largest daily drop in two weeks on Monday following hot data on the U.S. services sector.
The recent release of hot economic data has prompted more fears the Fed will drive the economy into a recession.
In Case You Missed It
- The ISM Services PMI rose unexpectedly in November. The index rose to 56.5% from 54.4% vs expectations for a drop to 53.7%. That data shows the services side of the economy maintaining strength in the face of the Fed’s rate hikes.