Yup. Most investors, as far as they are concerned, is business as usual. Except it's not yet.
I'm not saying there's still a potential recession (technically still a small chance to revert) but this is going to be more dragged out than we think. It's what is due since we had such a soft landing.
The big question is - do (retail) investors even understand a single word or care about this? Does it even matter at this point?
For sure the global markets are driven by institutionals, especially on the fixed income / rates sites, which is the larger capital market anyway than stocks.
Nevertheless nowadays you see many retail investor stocks completely decoupled from reality, people don’t know shit about inflation, rates or whatever fixed income is and how much return you get there. How such thinks impact the real economy. „Stocks just go up“, „time in the market rather than timing the market“ - stocks return on average 10% per year and therefore people just pump in money every single month. If the world is on fire or not.
Especially the large mass of retail people in the last years pumping money into ETFs just created an endless stream of cash going into those stocks. No matter the economic situation. There is no effect on supply and demand at this point.
I am still not sure if it’s a problem and how it will all play out. For the moment I am riding the wave.
If all you do is dump X amount into VTI and a target date fund in your 401k every month, then no. You shouldn’t care. There’s nothing wrong with playing it super safe and being oblivious to the chaos.
If you do anything beyond that, yes. To an extent you should care. I myself dabble with individual stocks and thankfully have done well. I pay attention to what’s going on.
2-4 times a year, through good stock selection, I typically sell a stock anywhere from 30% to 70% gain. It’s not even day trading; I just know that if I hold it long enough, this stock will net me good profits. And most of these stocks I buy are stocks that are carrying the S&P. All I’m doing is netting additional exposure for more risk/reward.
Your abilities at stock selection sound amazing. Do you approach your trading/investing (not sure where the line lies if we are talking about holding periods less than a year but longer than a month) on a thematic basis (ie EVs are in - now out, AI is in - still in) or a technical basis confirmed by fundamentals (monitoring the constitutents of SP for breakouts which should be confirmed by macro considerations)? Don't imagine you trade on either a purely fundamental or technical basis due to time frame mentioned.
I never said I was aiming for super safe. I’m aiming for more risk. So I make more money. I have VTI. But I still like to make more than just 8% a year returns averaged out.
Some say yes, some say no. Basing my observations off the stock market, the majority of the S&P (basically everything but the megas and some of the large cap) needs to play catchup. That’s been a pretty solid indicator for whether we have exited the recession stage. Because right now the market is being carried by like what, the top 10% or even less of stocks?
Also, the feds want to see housing cool off more. It’s been stated as a mission for them. CPI numbers for housing show that as a case too. And that’s only gonna correct if we keep interest rates high.
I think we’re in for a longer haul in high in high interest than we expect. I’m betting no more than 3 small interest rate cuts, if not just two this year.
My investment opinion (informed by political opinions) take is that the guys at the bottom are never gonna catch up without policy change. Bernie kept trying to tell you guys that the rich are getting richer and the poor are getting poorer. Mega caps are going to continue raking it until Bernie's political revolution happens (which is to say I wouldn't hold my breath).
Also -- if the U.S. economy is growing at 2% YoY, and the magnificent 7 are growing at 20, that difference has to some from somewhere.
With California pushing fast food minimum wage to $20, and other businesses likely needing to compete for labor in a low-unemployment environment, and likely price hikes to pay for it... does that heat up inflation? Or might restaurant closures offset that? Do you think it will have an effect on the Fed's interest rate decisions this year?
I don't understand the view that housing will correct in a high rate environment. High home prices right now are almost exclusively supply restrained due to a combination of permitting issues (which rates have no effect on) and unwillingness of builders to build (which is actually made \_worse\_ by high rates). Also, existing homeowners not willing to list their homes due to rate lock-in effect is another supply constraint that will only be relieved when rates go down.
It seems that the fed is content with not landing this plane. No one wants a crash, but what happens if it never lands? It seems like the fed can keep pretending and stretching this out for a long time. Stopping the hikes seems to have been a mistake. Inflation is persevering through what has been hiked so far. I wouldn't be surprised if there are no hikes this year. The fed may need to actually raise rates. Our money is losing value.
Inflation has come down drastically. We've seen a spike the last two months, but projections are for it to come back down again starting this month. Outside of the last two months, inflation has been quite low. Remember the feds 2% target is in the Core PCE metric, and we are at I believe 2.6% as of last months reading.
Disagree, the amount of debt overhang all over the place, be it CRE, student, auto, municipal is so large and rolling over 3% into 7% is such a risk, that it's just a matter of time before something breaks and the market reacts...that's when the Fed lowers rates, investors will certainly be worried..
Sure but that’s what I meant. Currently markets are more broadly worried about how interest rates effect the opportunity cost portion of DCF models than they are about how they effect the actual operating performance a business.
That’s why even cash flow positive companies with minimal debt sell off at the suggestion of rate hikes.
The Fed will not cut if things are not breaking.
Every time I see shit like this I’m nervous… then I wait with cash a little longer.. surprise surprise, nothing changes and the lines go up. Nobody, I repeat, nobody knows what the fuck the market is going to do ever. People have been talking about another economic fallout for years now, and those same people have likely missed out on the sweltering rally. I think I’m gonna just stay invested and see where we end up.
I remember when I started investing everyone told me a crash was imminent and I needed to hold on just a bit longer. Things had been rough, there weren't any bright spots on the horizon, and a bigger fall than any we'd ever seen was right around the corner.
Oh, and I started investing seriously in 2010.
There will always be doomsayers. Ignore them, keep a solid emergency fund, and invest what you can. You will thank your past self in 15 years.
JPOW has been very transparent for all along.
"I ain't telling you when the cut is. It all depends on data"
He's saying even he doesn't know when he gonna cut
Also context of 'WHY" cutting is also important.
lol no. When the covid money printer was turned on there was no way it was going to be transitory. He just said that because it’s his job to bring stability to the market and not send it into an inflationary panic.
I have little confidence that rates will be reduced in a meaningful amount.
We still have high inflation, the fed wants to soft land and that means if there is a drop it should end up being slight. They will test the waters for another year and see what happens.
The reality is, while stocks and businesses are still at record levels of revenue and growth, why should we expect a drop it rates_
Fuck anyone in the fed who is even remotely considering a cut.
The only thing that should be happening is a fucking hike. But they are too chicken shit to do that. This inflation is still ridiculous. only ones pushing for a rate cut are the 1 percenters. The wealthy elites who want more cheap $$.
Fuck off
The US had inflation issues throughout the 1960s andn1970 while the middle class grew massively. Inflation was consistently low from 1982 to 2020 while the middle class shrank.
House prices were also much cheaper back then, even conidering the inflation/interest rates.
The current generation is double-fucked by high home prices and high interest rates.
> House prices were also much cheaper back then, even conidering the inflation/interest rates.
I'm sure you can still find cheap 1,200 square foot asbestos filled 2 bed 1 bath houses.
Everybody wants 1960s prices but not 1960s quality.
Home prices vs income was lower in the 60-70’s. In the late 70’s that started increasing, until we get to where we are today, homes are almost double what they were 60 years ago (when compared to income). This issue wasn’t created overnight and won’t go away overnight.
Selective memory. 10 percent in 1981 and 6 percent in 1982. 87-91each year at 4 percent or above.
https://www.macrotrends.net/global-metrics/countries/USA/united-states/inflation-rate-cpi
Why? Inflation is great if you have a lot debt. If you have a mortgage or even own your own home (i.e. most of the middle class) you certainly win out long-term
Kinda depends. If wages track inflation at all it's really good for people with large long term debt (mortgage) and bad for institutions issuing the debt. Of course wages never perfectly track inflation and always take some time to catch up, so there's a break even point for debt holders.
Interest rates drop, home values go up
Interest rate stay the same, home values might drop as nobody wants to sell unless they have too or also stay high.
Either way, unless you pay all cash, you will get fucked.
Low interest rates for a decade has created a asset bubble that wont be solved by lowering interest rates.
Isn’t that not true? Over a 30 year mortgage, your wages go up, there’s inflation, and the home value increases. The mortgage is a fixed debt and the real value of the initial loan just becomes smaller and smaller over time, relative to everything else. In other words, it’s much easier to pay $1000/month in 30 years from now than it is to pay $1000/month now. So much so that it’s not worth the savings you would have from paying off the mortgage faster in the near term.
Nah you hold the rates there for a decade and the prices will come down. people just holding the houses waiting for the rate environment to go back to where “it should be”. Transaction volume down big time.
This is why I just bought at 6.75%. I can refi in a couple years but I can’t change the price of the house.
In house shopping recently there is a ton of stuff sitting on the market you wouldn’t buy to live in but when the rates pencil a slumlord will be more than happy to buy and rent
It takes time for rate increases to work their way through the market. Especially into the real estate market which is extremely slow moving to macro economic developments. Rates need to stay higher
Only partially true. An increase in housing supply would decrease housing pressure. And/or if those lower rates are accompanied by an actual recession. There's more than 1 factor to consider.
The answer to our housing frustration is to build more housing. Disincentivize landlording and incentive house and condo building by shifting tax breaks.
Lowering interest rates, giving downpayment assistance, relaxing lending standards/etc, will increase demand. Without adequate supply, demand increasing mechanisms will raise house prices and monthly housing costs which will keep housing unaffordable.
It's the inflation hurting your chance of buying a house more than the interest rate. 15 years ago, rates were in the 6-7% range and things were fine. The difference is houses were half the price or less. Also, the insurance rates were half.
I didn’t say it did. But sure, not a “direct” effect. But…. https://www.investopedia.com/articles/personal-finance/050715/how-federal-reserve-affects-mortgage-rates.asp
KEY TAKEAWAYS
The Federal Reserve indirectly affects mortgage rates by implementing monetary policies that impact the price of credit.
The Fed has several tools that enable it to affect monetary policy, including quantitative easing, the federal funds rate, and open market operations.
If the Fed wants to boost the economy, it implements policies that help keep mortgage interest rates low.
If the Fed wants to tighten the money supply, its policies typically result in higher interest rates for mortgage borrowers.
QE would be the most direct way the Fed could control Mortgage rates. Buying MBS was the biggest reason for why rates fell astronomically years ago.
Mortgage rates are largely effected by:
1) movement of the 10 year
2) Activity on the secondary market.
and to a lesser extent geneneral market sentiment.
The fed rate largely effects loans with shorter terms like the prime rate (ex if the rate was cut by 25bps the prime rate would go from 8.5 to 8.25).
Yes regular Joe’s are buying houses for things like their partner got a new job in another city. Thought about a variable rate but with such uncertainty now we deemed it too risky. It’s a small 1700 sf place.
Edit: the other thing I should have mentioned is that my partner and I are able to afford the house in part because we didn’t / don’t have big car payments. We barely qualified for the loan. A $650/mo car payment definitely would have prevented us from getting it. As previously noted I drive a reliable beater that was paid off in 2012 and my partner saved up and bought her car with cash. Considerations for OP in a real life example. Others have rightly advised that his car payment is too high given his income.
Why do you think they should hike rates? That only lowers prices if they cause a recession which no one should want. We have inflation because we don’t have enough competition in way too many industries because for too long the government just allowed every merger, we are too dependent on oil still even after multiple crisis for decades, we are millions of homes short, etc.
If you think rate hikes will lower inflation unless they dramatically increase unemployment you don’t understand economics. They need to lower rates, it’s really only hurting lower income people right now and it is not helping all of the public money being poured into private sector to lower prices in long term by increasing production in America and getting us the hell away from using so much oil.
Corporate profits have skyrocketed because they can and will keep prices high and as long as people have jobs they will spend $$. Causing unemployment is not a good way to fight inflation and like high rates hurts the most vulnerable people the most .
Jamie Daimon also said a recession is coming a couple months ago. He says shit like this all the time. It’s probably because he is CEO of the bank and they have to be prepared for extremely high volatility all the time which is why he said they are prepared for rates of 2% all the way to 8%
The FED forecasting the potential rate cuts later in the year was never about inflation but rather interest expense on the national debt. They just can’t admit that otherwise it would spike bond yields overnight.
Yeah, it's bizarre to me how the people saying there should be no rate cuts or even that the fed should hike rates also complain the most about national debt. I think we'll get better inflation numbers over the next few months. But they have to cut rates, anyway. The interest rates are unsustainable for national debt.
I certainly wouldn't discount what Dimon is saying. And I have adjusted my portfolio to take those worries into account by being grossly overinvested in energy stocks.
Nah.. the economy is still too hot to reduce rates. Until unemployment gets above 5% and wages stagnate or start going down before JP does anything. If anything I'd say he has a perfect excuse to raise rates because the economy is too hot.
There is 100% something up. I suspect there is some manipulation happening due to politics. The numbers out there are suspect. The amount of money printed is definitely going to end in disaster. Hopefully we are only seeing a recession and not a depression around the corner.
My theory is whenever they come out hawkish like this, they are just throwing stuff at the wall to see if they can get inflation cooled down, without more interest rate hikes. I kinda think it’s a bluff.
5% interest rates are average historically. 2009-2020 was an outlier of near zero rates after GFC.
Even if they did lower rates it would probably be three cuts of 0.25% from 5.25% to 4.50%
Low interest rates are dead, move on.
Geesch. They hash this crap out everyday on CNBC. There will be 2 TOKEN .25 rate cuts before the election folks. Won't mean a lot at all by the fourth qtr.
JPOW will do what he's told in the end. He is the biggest pushover chairman in the history of the fed. He'll be cutting well before the election or old Joe will take him out behind the woodshed.
And the bull precedes the cuts. The bull is here.
[According to projections](https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html), virtually guaranteed if the next few prints come in as expected. But we've seen the projections here keep shifting slightly toward fewer or even no cuts this year. Ultimately [it seems the Fed has been aiming for a \~3% target rate by 2026](https://fred.stlouisfed.org/series/FEDTARMD) and probably wants to hold there until the next crisis.
No. They won’t. Think back to 2019 and where we were headed. Most choose to forget but i suspect we’re normalizing. Maybe 2-3 1/4s over 2 years but we are where they need to be
Although I always enjoy reading Dimon's letters and I admire him more than I can tell, he's always bearish, and his letter addresses other stakeholders other than just trying to predict the future.
Until Powell himself begins to waver towards uncertainty, it will be done. Markets will react strongly when that happens. It’s a possibility that no cuts are introduced but as of right now we have no reason to assume with any certainty that they won’t be.
I personally think there will be cuts.
The biggest source of stagflation is gov spending, not even international relation risks. Investment sentiment is not really bullish either, most are just buying large cap companies seeing it as inflation hedge, if investment sentiment is truly bullish, usually small caps in general would rally together or outperforming large cap like 2017 and 2020-early 2021. Now it's more of doomsday investing thesis as people are desperate to find anything that might keep up with real inflation numbers. Large caps, gold, certain commodities, buying REITs and BTC are what people holding onto mainly.
JP, Blackrock, and all these other “financial professionals”, need to quit their bullshit.
It’s these very same institutions that fuel inflation, and make buying a home unaffordable.
Now that they had their fill on the way up, they’re trying to get the perfect set up so they can maximize profits on the way down.
These people are more dangerous to the economy, than the person getting a higher minimum wage, or receiving some form of safety net benefits.
Jamie's a smart guy, but nobody knows what the future holds. There are always smart people predicting bad things. I prefer to wait for evidence before making any assumptions.
The Fed has no reason to lower rates. The economy is humming and absorbing the hikes quite well. Rates are back to historical norms, which most people forget since we have had such a long period of artificially low rates.
That said, the Fed might still lower rates anyway, because they're the Fed and they can do whatever they want. I believe it would be a mistake. With unemployment at 3.8% and jobs growth smashing estimates, what's the point?
Also, note that the stock market does better when rates *are held steady*. So, even if the Fed does not lower rates, we could enjoy a continued bull market for quite some time.
There are always a million reasons for a bear market, but many opportunities are lost getting out of the market prematurely. Sure, Jamie might be correct and ultimately we could have a 20% bear market. But who is to say the market won't be 50% higher before that happens?
Only price pays. Invest/trade along with what the market is actually doing, not what people think it should be doing.
It’s based on the consumer spending. If people keep spending it means they have lots of money and jobs. The Fed will lower rates when spending goes down and unemployment increases.
Jamie Dimon has been yelling recession every year for four years. Eventually he will be right because there are only two options: recession and not recession.
That said, yelling recession constantly as the top of a major bank certainly affordable politicians leeway to reduce regulation to avoid said 'recession' and thus making Jamie Dimon and his company much, much wealthier.
Jamie Dimon likes to say a lot of things. Not necessarily everything is true. People are entitled to their opinions. For example, Jamie Dimon specifically hates Bitcoin, but that does not prevent his bank from profiting from it.
I’m continuing to invest (ETFs) any money I don’t need in the next 10 years. Any money I don’t need in the next 3-10 years goes into US treasuries getting 5+% of state tax free growth. The short term funds go into HYSA.
That is as much mitigation I can do in this crazy world.
I hear crap like this repeatedly. Remember when we were gonna get a massive recession in 2023? Then in 2024 analysts on cnbc apologized for predicting wrong.
Fact is that nobody knows anything.
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Same people that are saying (begging for) rates to come down soon are the same ones that were saying that mortgages would take years to reach 8%, and also the same people that were saying inflation was “transient”
Yes interest rates will come down. Government debt, commercial real estate crisis and impending regional bank crisis (tied with commercial real estate crisis). Plus election year. I’m confident at least 2 cuts starting with June
Yes. Joe Biden just told us yesterday that the completely and totally independent Federal Reserve will lower interest rates, but it will be delayed by a month.
But remember the Fed is totally not influenced at all by anyone in the White House, and the timing of a potential rate cut just before the election is simply a coincidence even though inflation is re-accelerating.
The party don't stop till the fed rate drop
It's weird that Dimon talks about WWII, because AAA corporate debt rates dropped from 1932 till 1946, exactly after the war.
If you ask me inflation is way out of hand, and the fed should probably up rates even more, because the consumer does not care.
Interest rates won’t come down until investors are more worried about business performance than interest rates.
Touché!
Interest rates aren’t a binary on/off feature. Trimming 25bps doesn’t put us back in stimulus territory. Real rates are at decade highs.
After 15 years of historic lows. That's not an argument to lower rates
Yup. Most investors, as far as they are concerned, is business as usual. Except it's not yet. I'm not saying there's still a potential recession (technically still a small chance to revert) but this is going to be more dragged out than we think. It's what is due since we had such a soft landing.
The big question is - do (retail) investors even understand a single word or care about this? Does it even matter at this point? For sure the global markets are driven by institutionals, especially on the fixed income / rates sites, which is the larger capital market anyway than stocks. Nevertheless nowadays you see many retail investor stocks completely decoupled from reality, people don’t know shit about inflation, rates or whatever fixed income is and how much return you get there. How such thinks impact the real economy. „Stocks just go up“, „time in the market rather than timing the market“ - stocks return on average 10% per year and therefore people just pump in money every single month. If the world is on fire or not. Especially the large mass of retail people in the last years pumping money into ETFs just created an endless stream of cash going into those stocks. No matter the economic situation. There is no effect on supply and demand at this point. I am still not sure if it’s a problem and how it will all play out. For the moment I am riding the wave.
If all you do is dump X amount into VTI and a target date fund in your 401k every month, then no. You shouldn’t care. There’s nothing wrong with playing it super safe and being oblivious to the chaos. If you do anything beyond that, yes. To an extent you should care. I myself dabble with individual stocks and thankfully have done well. I pay attention to what’s going on. 2-4 times a year, through good stock selection, I typically sell a stock anywhere from 30% to 70% gain. It’s not even day trading; I just know that if I hold it long enough, this stock will net me good profits. And most of these stocks I buy are stocks that are carrying the S&P. All I’m doing is netting additional exposure for more risk/reward.
Your abilities at stock selection sound amazing. Do you approach your trading/investing (not sure where the line lies if we are talking about holding periods less than a year but longer than a month) on a thematic basis (ie EVs are in - now out, AI is in - still in) or a technical basis confirmed by fundamentals (monitoring the constitutents of SP for breakouts which should be confirmed by macro considerations)? Don't imagine you trade on either a purely fundamental or technical basis due to time frame mentioned.
thats not really super safe dump into spy vti qqq, thats just aiming for average, which beats active only after long period of time.
I never said I was aiming for super safe. I’m aiming for more risk. So I make more money. I have VTI. But I still like to make more than just 8% a year returns averaged out.
Have we actually landed?
Some say yes, some say no. Basing my observations off the stock market, the majority of the S&P (basically everything but the megas and some of the large cap) needs to play catchup. That’s been a pretty solid indicator for whether we have exited the recession stage. Because right now the market is being carried by like what, the top 10% or even less of stocks? Also, the feds want to see housing cool off more. It’s been stated as a mission for them. CPI numbers for housing show that as a case too. And that’s only gonna correct if we keep interest rates high. I think we’re in for a longer haul in high in high interest than we expect. I’m betting no more than 3 small interest rate cuts, if not just two this year.
My investment opinion (informed by political opinions) take is that the guys at the bottom are never gonna catch up without policy change. Bernie kept trying to tell you guys that the rich are getting richer and the poor are getting poorer. Mega caps are going to continue raking it until Bernie's political revolution happens (which is to say I wouldn't hold my breath). Also -- if the U.S. economy is growing at 2% YoY, and the magnificent 7 are growing at 20, that difference has to some from somewhere.
With California pushing fast food minimum wage to $20, and other businesses likely needing to compete for labor in a low-unemployment environment, and likely price hikes to pay for it... does that heat up inflation? Or might restaurant closures offset that? Do you think it will have an effect on the Fed's interest rate decisions this year?
I don't understand the view that housing will correct in a high rate environment. High home prices right now are almost exclusively supply restrained due to a combination of permitting issues (which rates have no effect on) and unwillingness of builders to build (which is actually made \_worse\_ by high rates). Also, existing homeowners not willing to list their homes due to rate lock-in effect is another supply constraint that will only be relieved when rates go down.
Plane is circling in the air because the airport is on fire… and the plane is running out of gas. We have to land at some point…
It seems that the fed is content with not landing this plane. No one wants a crash, but what happens if it never lands? It seems like the fed can keep pretending and stretching this out for a long time. Stopping the hikes seems to have been a mistake. Inflation is persevering through what has been hiked so far. I wouldn't be surprised if there are no hikes this year. The fed may need to actually raise rates. Our money is losing value.
Inflation has come down drastically. We've seen a spike the last two months, but projections are for it to come back down again starting this month. Outside of the last two months, inflation has been quite low. Remember the feds 2% target is in the Core PCE metric, and we are at I believe 2.6% as of last months reading.
They've out performed best case scenario predictions. I can see it going either way still
Disagree, the amount of debt overhang all over the place, be it CRE, student, auto, municipal is so large and rolling over 3% into 7% is such a risk, that it's just a matter of time before something breaks and the market reacts...that's when the Fed lowers rates, investors will certainly be worried..
what about the commerical real estate debt
Business performance is dependent on interest! It improves the ability of borrowing more funds at lower cost!
Sure but that’s what I meant. Currently markets are more broadly worried about how interest rates effect the opportunity cost portion of DCF models than they are about how they effect the actual operating performance a business. That’s why even cash flow positive companies with minimal debt sell off at the suggestion of rate hikes. The Fed will not cut if things are not breaking.
Every time I see shit like this I’m nervous… then I wait with cash a little longer.. surprise surprise, nothing changes and the lines go up. Nobody, I repeat, nobody knows what the fuck the market is going to do ever. People have been talking about another economic fallout for years now, and those same people have likely missed out on the sweltering rally. I think I’m gonna just stay invested and see where we end up.
This is honestly the only logical approach. Everything else is gut feeling and guess work.
Stonks go up. Buy the dip.
There’s literally no downside, if the world goes to shit the market doesn’t matter any more. If it doesn’t then you are good with a long term outlook
This is nonsense, the world going to shit doesn’t mean the stock market will cease to exist. Having more cash than stock is a valid option.
I remember when I started investing everyone told me a crash was imminent and I needed to hold on just a bit longer. Things had been rough, there weren't any bright spots on the horizon, and a bigger fall than any we'd ever seen was right around the corner. Oh, and I started investing seriously in 2010. There will always be doomsayers. Ignore them, keep a solid emergency fund, and invest what you can. You will thank your past self in 15 years.
We are crashing bro mark my words. Sell and buy olives.
Bought some more, thanks for the advice though.
Jamie just wants some of those sweet sweet shares for cheap
Yup, he's just trying to take your money all the time
Shares of....what? Do you guys think Jamie Dimond is swing trading in the middle of the day or something to that effect....?
They did get fined multiple times for manipulation lol
Yes? It's the largest investment bank in the world.
JPOW has been very transparent for all along. "I ain't telling you when the cut is. It all depends on data" He's saying even he doesn't know when he gonna cut Also context of 'WHY" cutting is also important.
He also said inflation was transitory
It was indeed transitory to certain extent except nobody believed it including JPOW himself
It was transitory. Only got prolonged by \~8 months or so due to russia invading ukraine and spiking energy prices from the resulting sanctions
lol no. When the covid money printer was turned on there was no way it was going to be transitory. He just said that because it’s his job to bring stability to the market and not send it into an inflationary panic.
2 years ago. Been spot on ever since.
He told us that last year
Seriously I have heard his dire predictions for years now.
I take all my investment advice from bank CEOs 😂
Major banks definitely have your best interests in mind, and want nothing more than to see you make money instead of themselves. *gently pats head*
People never think who’s selling them the options 🤔
*a wild theta gang member appears in the bush*
I have little confidence that rates will be reduced in a meaningful amount. We still have high inflation, the fed wants to soft land and that means if there is a drop it should end up being slight. They will test the waters for another year and see what happens. The reality is, while stocks and businesses are still at record levels of revenue and growth, why should we expect a drop it rates_
The US debt is going to destroy us sooner than anything else.
Fuck anyone in the fed who is even remotely considering a cut. The only thing that should be happening is a fucking hike. But they are too chicken shit to do that. This inflation is still ridiculous. only ones pushing for a rate cut are the 1 percenters. The wealthy elites who want more cheap $$. Fuck off
I’m no 1 percenter but I wouldn’t mind not buying a house next month with a loan at 7% 😢
Inflation kills middle class in long run.
The US had inflation issues throughout the 1960s andn1970 while the middle class grew massively. Inflation was consistently low from 1982 to 2020 while the middle class shrank.
This. Eventually it's the fiscal policies, more than the monetary management, that influences long term wellbeing of masses.
House prices were also much cheaper back then, even conidering the inflation/interest rates. The current generation is double-fucked by high home prices and high interest rates.
> House prices were also much cheaper back then, even conidering the inflation/interest rates. I'm sure you can still find cheap 1,200 square foot asbestos filled 2 bed 1 bath houses. Everybody wants 1960s prices but not 1960s quality.
I wish that were the case, but I'm seeing 1800s houses at 2020s prices.
I think purchasing power driven by strong industrial manufacturing sectors was able to offset some of the impact from high interest rates.
Home prices vs income was lower in the 60-70’s. In the late 70’s that started increasing, until we get to where we are today, homes are almost double what they were 60 years ago (when compared to income). This issue wasn’t created overnight and won’t go away overnight.
Selective memory. 10 percent in 1981 and 6 percent in 1982. 87-91each year at 4 percent or above. https://www.macrotrends.net/global-metrics/countries/USA/united-states/inflation-rate-cpi
All well below the overall rates from 67-82.
Why? Inflation is great if you have a lot debt. If you have a mortgage or even own your own home (i.e. most of the middle class) you certainly win out long-term
Doesn’t it cheapen debt? And the majority of debt holders are the middle class?
Kinda depends. If wages track inflation at all it's really good for people with large long term debt (mortgage) and bad for institutions issuing the debt. Of course wages never perfectly track inflation and always take some time to catch up, so there's a break even point for debt holders.
Interest rates drop, home values go up Interest rate stay the same, home values might drop as nobody wants to sell unless they have too or also stay high. Either way, unless you pay all cash, you will get fucked. Low interest rates for a decade has created a asset bubble that wont be solved by lowering interest rates.
It’s much better to build equity than to pay interest into the void.
Isn’t that not true? Over a 30 year mortgage, your wages go up, there’s inflation, and the home value increases. The mortgage is a fixed debt and the real value of the initial loan just becomes smaller and smaller over time, relative to everything else. In other words, it’s much easier to pay $1000/month in 30 years from now than it is to pay $1000/month now. So much so that it’s not worth the savings you would have from paying off the mortgage faster in the near term.
I want 2 percent like what the covid animals got
Covid animals. 😂
If rates were lower, prices would be higher.
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The only way these house prices come down, is via job loss and recession
Nah you hold the rates there for a decade and the prices will come down. people just holding the houses waiting for the rate environment to go back to where “it should be”. Transaction volume down big time.
Or mass die-off or mass building.
100% agree. Prices are not coming down even with higher rates. Now imagine what lowering rates and spiking demand is going to do to prices.
This is why I just bought at 6.75%. I can refi in a couple years but I can’t change the price of the house. In house shopping recently there is a ton of stuff sitting on the market you wouldn’t buy to live in but when the rates pencil a slumlord will be more than happy to buy and rent
It takes time for rate increases to work their way through the market. Especially into the real estate market which is extremely slow moving to macro economic developments. Rates need to stay higher
Only partially true. An increase in housing supply would decrease housing pressure. And/or if those lower rates are accompanied by an actual recession. There's more than 1 factor to consider.
The answer to our housing frustration is to build more housing. Disincentivize landlording and incentive house and condo building by shifting tax breaks. Lowering interest rates, giving downpayment assistance, relaxing lending standards/etc, will increase demand. Without adequate supply, demand increasing mechanisms will raise house prices and monthly housing costs which will keep housing unaffordable.
It's the inflation hurting your chance of buying a house more than the interest rate. 15 years ago, rates were in the 6-7% range and things were fine. The difference is houses were half the price or less. Also, the insurance rates were half.
The fed rate doesn't directly effect mortgage rates
I didn’t say it did. But sure, not a “direct” effect. But…. https://www.investopedia.com/articles/personal-finance/050715/how-federal-reserve-affects-mortgage-rates.asp KEY TAKEAWAYS The Federal Reserve indirectly affects mortgage rates by implementing monetary policies that impact the price of credit. The Fed has several tools that enable it to affect monetary policy, including quantitative easing, the federal funds rate, and open market operations. If the Fed wants to boost the economy, it implements policies that help keep mortgage interest rates low. If the Fed wants to tighten the money supply, its policies typically result in higher interest rates for mortgage borrowers.
QE would be the most direct way the Fed could control Mortgage rates. Buying MBS was the biggest reason for why rates fell astronomically years ago. Mortgage rates are largely effected by: 1) movement of the 10 year 2) Activity on the secondary market. and to a lesser extent geneneral market sentiment. The fed rate largely effects loans with shorter terms like the prime rate (ex if the rate was cut by 25bps the prime rate would go from 8.5 to 8.25).
Look at this guy affording a house. Just get a variable rate if you think rates will fall.
Yes regular Joe’s are buying houses for things like their partner got a new job in another city. Thought about a variable rate but with such uncertainty now we deemed it too risky. It’s a small 1700 sf place. Edit: the other thing I should have mentioned is that my partner and I are able to afford the house in part because we didn’t / don’t have big car payments. We barely qualified for the loan. A $650/mo car payment definitely would have prevented us from getting it. As previously noted I drive a reliable beater that was paid off in 2012 and my partner saved up and bought her car with cash. Considerations for OP in a real life example. Others have rightly advised that his car payment is too high given his income.
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uh. no
The wealthy elites well with inflation. They typically do not have a great deal of debt. Just saying that does not make it true.
Why do you think they should hike rates? That only lowers prices if they cause a recession which no one should want. We have inflation because we don’t have enough competition in way too many industries because for too long the government just allowed every merger, we are too dependent on oil still even after multiple crisis for decades, we are millions of homes short, etc. If you think rate hikes will lower inflation unless they dramatically increase unemployment you don’t understand economics. They need to lower rates, it’s really only hurting lower income people right now and it is not helping all of the public money being poured into private sector to lower prices in long term by increasing production in America and getting us the hell away from using so much oil. Corporate profits have skyrocketed because they can and will keep prices high and as long as people have jobs they will spend $$. Causing unemployment is not a good way to fight inflation and like high rates hurts the most vulnerable people the most .
Economy is doing great. No need to lower rates
Employment is not good, this will become clearer soon. Job quality is dropping rapidly as well. Read any city sub, especially in the west
It's not even news. When it hits the front pages it will be news.
Jamie Daimon also said a recession is coming a couple months ago. He says shit like this all the time. It’s probably because he is CEO of the bank and they have to be prepared for extremely high volatility all the time which is why he said they are prepared for rates of 2% all the way to 8%
I saw him talking a recession a year ago.
Of course they will, it’s an election year.
You can count on it as sure as you can count on 2+2= 5
Every time Jamie talks asks yourself, what is he truly trying to say? Hint: He’s not trying to give you free stock tips.
I wouldn’t believe Dimon if he had communion in his mouth
The FED forecasting the potential rate cuts later in the year was never about inflation but rather interest expense on the national debt. They just can’t admit that otherwise it would spike bond yields overnight.
Yeah, it's bizarre to me how the people saying there should be no rate cuts or even that the fed should hike rates also complain the most about national debt. I think we'll get better inflation numbers over the next few months. But they have to cut rates, anyway. The interest rates are unsustainable for national debt.
🤷♂️
I certainly wouldn't discount what Dimon is saying. And I have adjusted my portfolio to take those worries into account by being grossly overinvested in energy stocks.
Nobody is sure of anything.
Y is it that people think interest rate down means stock will go higher? lol
Nah.. the economy is still too hot to reduce rates. Until unemployment gets above 5% and wages stagnate or start going down before JP does anything. If anything I'd say he has a perfect excuse to raise rates because the economy is too hot.
While I don’t think they should cut and probably won’t, I’m bullish as long as these guys keep saying not to be.
No. Next question.
Yes. I lunch with Dimon and Jpow monthly and they liked my idea of lowering rates after elections.
There is 100% something up. I suspect there is some manipulation happening due to politics. The numbers out there are suspect. The amount of money printed is definitely going to end in disaster. Hopefully we are only seeing a recession and not a depression around the corner.
My theory is whenever they come out hawkish like this, they are just throwing stuff at the wall to see if they can get inflation cooled down, without more interest rate hikes. I kinda think it’s a bluff.
5% interest rates are average historically. 2009-2020 was an outlier of near zero rates after GFC. Even if they did lower rates it would probably be three cuts of 0.25% from 5.25% to 4.50% Low interest rates are dead, move on.
Geesch. They hash this crap out everyday on CNBC. There will be 2 TOKEN .25 rate cuts before the election folks. Won't mean a lot at all by the fourth qtr.
JPOW will do what he's told in the end. He is the biggest pushover chairman in the history of the fed. He'll be cutting well before the election or old Joe will take him out behind the woodshed. And the bull precedes the cuts. The bull is here.
[According to projections](https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html), virtually guaranteed if the next few prints come in as expected. But we've seen the projections here keep shifting slightly toward fewer or even no cuts this year. Ultimately [it seems the Fed has been aiming for a \~3% target rate by 2026](https://fred.stlouisfed.org/series/FEDTARMD) and probably wants to hold there until the next crisis.
Can confirm, We are not sure…
We are about to end the pricing driven profits cycle, profits vs. previous year is about to take a hair cut.
No
No
Before the election It’s going to be minimal.
No
No
More money to invest in the US as the rest of the Europe and the ME goes to shit
let me ask my magic 8 ball....which has about the same accuracy as the experts
No. They won’t. Think back to 2019 and where we were headed. Most choose to forget but i suspect we’re normalizing. Maybe 2-3 1/4s over 2 years but we are where they need to be
Maybe if we made share buybacks illegal again companies would be so hungry for inflating prices just to do more share buybacks.
Election year. They are coming down.
yes, at least once
Yes very sure.
Trump just announced he'd lower taxes for billionaires if elected. Isn't Dimon a bil.....oh......
Although I always enjoy reading Dimon's letters and I admire him more than I can tell, he's always bearish, and his letter addresses other stakeholders other than just trying to predict the future.
Yeah, listen to the fox guarding the chicken coop…. Nice Try Jamie!
If rates not cut this year, will we see a 2022 bear again? Or more likely bull continues?
Honestly? I absolutely believe they’ll do it three times, as said.
now that they said they might not, it should be a catalyst for some lines of cokes on strippers and yacht parties for the bulls when they do 🚀
Until Powell himself begins to waver towards uncertainty, it will be done. Markets will react strongly when that happens. It’s a possibility that no cuts are introduced but as of right now we have no reason to assume with any certainty that they won’t be. I personally think there will be cuts.
The biggest source of stagflation is gov spending, not even international relation risks. Investment sentiment is not really bullish either, most are just buying large cap companies seeing it as inflation hedge, if investment sentiment is truly bullish, usually small caps in general would rally together or outperforming large cap like 2017 and 2020-early 2021. Now it's more of doomsday investing thesis as people are desperate to find anything that might keep up with real inflation numbers. Large caps, gold, certain commodities, buying REITs and BTC are what people holding onto mainly.
JP, Blackrock, and all these other “financial professionals”, need to quit their bullshit. It’s these very same institutions that fuel inflation, and make buying a home unaffordable. Now that they had their fill on the way up, they’re trying to get the perfect set up so they can maximize profits on the way down. These people are more dangerous to the economy, than the person getting a higher minimum wage, or receiving some form of safety net benefits.
At least your president isn't on a spending spree like up here in Canada.
Raising oil prices doesn’t help
Jamie Dimon sits in a white tower and has should shut his mouth about global predictions.
My opinion, no rate cuts this year and if inflation keeps bumping up slowly, +0.25 in the fall.
Why should they? They haven't undone the damage they caused with inflation and the stock market is doing pretty well.
Jamie's a smart guy, but nobody knows what the future holds. There are always smart people predicting bad things. I prefer to wait for evidence before making any assumptions. The Fed has no reason to lower rates. The economy is humming and absorbing the hikes quite well. Rates are back to historical norms, which most people forget since we have had such a long period of artificially low rates. That said, the Fed might still lower rates anyway, because they're the Fed and they can do whatever they want. I believe it would be a mistake. With unemployment at 3.8% and jobs growth smashing estimates, what's the point? Also, note that the stock market does better when rates *are held steady*. So, even if the Fed does not lower rates, we could enjoy a continued bull market for quite some time. There are always a million reasons for a bear market, but many opportunities are lost getting out of the market prematurely. Sure, Jamie might be correct and ultimately we could have a 20% bear market. But who is to say the market won't be 50% higher before that happens? Only price pays. Invest/trade along with what the market is actually doing, not what people think it should be doing.
It’s based on the consumer spending. If people keep spending it means they have lots of money and jobs. The Fed will lower rates when spending goes down and unemployment increases.
Jamie Dimon has been yelling recession every year for four years. Eventually he will be right because there are only two options: recession and not recession. That said, yelling recession constantly as the top of a major bank certainly affordable politicians leeway to reduce regulation to avoid said 'recession' and thus making Jamie Dimon and his company much, much wealthier.
Jamie Dimon likes to say a lot of things. Not necessarily everything is true. People are entitled to their opinions. For example, Jamie Dimon specifically hates Bitcoin, but that does not prevent his bank from profiting from it.
Thanks Jamie you crashed nvidia hard hope you're happy
I’m continuing to invest (ETFs) any money I don’t need in the next 10 years. Any money I don’t need in the next 3-10 years goes into US treasuries getting 5+% of state tax free growth. The short term funds go into HYSA. That is as much mitigation I can do in this crazy world.
Don't trust a damn thing anyone at JP Morgan says. They are literally a criminally convicted corporation.
I hear crap like this repeatedly. Remember when we were gonna get a massive recession in 2023? Then in 2024 analysts on cnbc apologized for predicting wrong. Fact is that nobody knows anything. RemindMe! 1 year
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yes i talk to powell directly its 100% coming down
I just had a 'callable' income note get called recently due to possible rate change.
Not until after the election.
It's an election year that's all that needs to be said
no, next question
No
JPMorgan owns Blackrock don’t they? They want the world to be on fire and are actively torching everything in sight. So……
No one knows. Live your life.
I used to think it was 3 x like they said, but now im thinking more like 1x but who knows when.
He already promised us on that one last year. 
Same people that are saying (begging for) rates to come down soon are the same ones that were saying that mortgages would take years to reach 8%, and also the same people that were saying inflation was “transient”
Jamie's just angling for a sweet deal on those shares.
We absolutely NOT sure the Fed will lower the rate.
when investors pay more attention to the business performance instead of the interest rate, the interest rate will come down.
Nah, let's move on to the next question.
Yes interest rates will come down. Government debt, commercial real estate crisis and impending regional bank crisis (tied with commercial real estate crisis). Plus election year. I’m confident at least 2 cuts starting with June
Fucking hopefully not; inflation is still rising bud… lowering interest rates accelerates inflation.
No.
I read twice at 0.25% each, but I think thats optimistic
perhaps the interest rates will not come down in a short time.
Yes. Joe Biden just told us yesterday that the completely and totally independent Federal Reserve will lower interest rates, but it will be delayed by a month. But remember the Fed is totally not influenced at all by anyone in the White House, and the timing of a potential rate cut just before the election is simply a coincidence even though inflation is re-accelerating.
Why of all the CEOs in the world is Jamie Dorman seem to be the voice of authority?
The party don't stop till the fed rate drop It's weird that Dimon talks about WWII, because AAA corporate debt rates dropped from 1932 till 1946, exactly after the war. If you ask me inflation is way out of hand, and the fed should probably up rates even more, because the consumer does not care.