In a dramatic warning released on April 4, JPMorgan highlighted the looming economic dangers associated with trade tensions. Richard Madigan, the chief investment officer of their private bank, indicated that escalating tariffs could not only inflict harm domestically but also lead to a recession both in the U.S. and globally. His note, titled “High Anxiety: Market Implications of Tariffs,” signalled a stark shift from market optimism to a growing cloud of fear as tensions rise between the U.S. and China, particularly after China’s 34% counter-tariff on U.S. imports.
Madigan cautioned that sustained tariffs might drive inflation up by 1-2%, significantly impacting economic growth. If the current policies remain unchanged, he predicts the potential for a recession looms large, labelling it as “self-inflicted pain”. He suggested investors keep a close eye on 10-year bond yields; a decline could indicate heightened recession fears among market participants.
Corporate earnings predictions, he said, are woefully optimistic. “I expect the 10% earnings forecast this year will quickly ratchet lower,” he asserted. Comparing the U.S. trade stance to an overly assertive negotiation strategy, he noted that such high starting points could damage credibility and alienate trading partners. “No one’s happy with the tariffs announced except the President,” Madigan remarked, raising concerns about the adverse effects on global trade.
On interest rates, Madigan advised that the widely anticipated four Federal Reserve cuts may be overly ambitious, strongly suggesting instead that only one is likely, perhaps two if growth falters significantly. As consumer spending wanes and businesses pause hiring, he concluded that the risks in the market are higher than expected, and uncertainty prevails in the economic landscape.
JPMorgan issued a warning about escalating trade tensions potentially leading to a U.S. recession. Richard Madigan highlighted the risks of inflation and overly optimistic corporate earnings amidst tariff battles. He cautioned investors to monitor bond yields and suggested that anticipated rate cuts from the Federal Reserve may be overly optimistic given current economic conditions.
JPMorgan’s recent warnings shed light on the potential dangers posed by escalating tariffs, highlighting the risk of a recession both in the U.S. and across the globe. Richard Madigan’s insights into rising inflation, overestimated corporate earnings, and the fragile state of the market paint a cautionary picture for investors. As uncertainties loom, the economic outlook is anything but clear, necessitating careful monitoring of monetary policy and market movements.
Original Source: news.bitcoin.com
