Bob Michele, JPMorgan’s head of global fixed income, and Richard Bernstein, CEO and CIO of Bernstein Advisors, join ‘The Exchange’ to discuss the hard landing scenario, opportunity in treasury yields, and low-risk investments outside of the Magnificent 7. For access to live and exclusive video from CNBC subscribe to CNBC PRO:
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Expect Recession Around Year End: JPMorgan’s Bob Michele
In a recent statement, JPMorgan’s Chief Investment Officer, Bob Michele, has warned that a recession is likely to hit around year-end. With the global economy still grappling with the aftermath of the COVID-19 pandemic, Michele’s prediction is a cause for concern for investors and policymakers alike.
Michele bases his forecast on several factors that point towards a tumultuous economic period ahead. The primary driver behind his prediction is a combination of rising inflation and potential interest rate hikes by central banks. As economies recover and reopen, there has been a surge in consumer spending and investment activity that has fueled inflationary pressures. This, in turn, has raised concerns about central banks tightening monetary policies to curb inflation, which could lead to an economic downturn.
Furthermore, Michele highlights the lingering uncertainty surrounding the withdrawal of government stimulus programs. Many countries deployed massive fiscal measures to support businesses and individuals during the pandemic-induced lockdowns. However, as economies reopen and the immediate crisis subsides, governments will inevitably confront the challenge of winding down these programs. This process could potentially disrupt the delicate recovery and even push some businesses and households into financial distress, thereby triggering a recession.
The ongoing global supply chain disruptions also play a significant role in Michele’s prediction. Since the pandemic hit, global trade has been severely impacted, leading to supply chain bottlenecks and shortages of crucial goods. These disruptions have not only contributed to inflationary pressures but also eroded consumer and business confidence. As a result, businesses may face heightened operational challenges and reduced profitability, further hampering economic growth.
Despite these warning signs, it is important to approach any recession prediction with caution. Economic forecasting is a complex task, and unforeseen events can swiftly alter outlooks. Moreover, many factors affecting the trajectory of the global economy remain uncertain. For instance, the effectiveness and timing of vaccine distribution, potential new virus variants, and geopolitical tensions could all influence the likelihood and timing of a recession.
Nevertheless, Michele’s concerns should not be disregarded entirely. JPMorgan’s track record and their access to extensive economic data give credence to their CIO’s insights. Investors and policymakers should take this warning as an opportunity to assess their risk exposure and prepare contingency plans.
In conclusion, the prediction of a recession around year-end by JPMorgan’s Bob Michele serves as a reminder that the path to global economic recovery remains volatile. Rising inflation, potential interest rate hikes, withdrawal of government stimulus programs, and global supply chain disruptions all contribute to the concerns raised by Michele. While economic forecasting is inherently uncertain, investors and policymakers should heed these warnings and stay vigilant in their decision-making processes.
JPMorgan’s Bob Michele Predicts Recession by Year End appeared first on Inflation Protection.
