FAST FIVE: Here Comes The Pivot: JPM Sees Sharp Slowdown In US Economy, "No Further Hawkish Developments From The Fed"

Published by on

And while the seasonal volatility in claims around the new year could be amplifying the rise, this was the survey week for the January employment report and presages a much weaker payroll growth this month.

Of course, one can blame the Omicron spike in December for much of this slowdown, and many do – especially those who confused the surge in inflation in 2021 as a “transitory” phenomenon – and are now using covid as a smokescreen to argue that the current slowdown is transitory, but the reality is that there is much more to the current sharp slowdown, and Bank of America's  Michael Hartnett put it best on Friday when he said that the “End of Pandemic = US Consumer Recession” (more here).

And since Wall Street always leads Main Street (sorry peasants), it is Hartnett's view that the current “rates shock” is grounds for an imminent “recession fear”, and as noted above, the Fed hiking into a slowdown guarantees not only an economic a recession but also a market crisis.

Which is why JPMorgan's economists go on a limb and perhaps seeking to assure markets, write that “next week's FOMC meeting will not present the case for further hawkish developments”.

and will order Powell to keep hiking and tightening just to break inflation's back (as discussed above, and as Blackrock also noted recently, the Fed is completely powerless to halt supply-driven inflation), even if it means the destruction of the entire wealth effect that the Fed spent the past 13 years trying to create.

Categories: ZH