Falling Markets Show Trump the Other Side of the Tax Stimulus
- 6 years ago
Falling Markets Show Trump the Other Side of the Tax Stimulus
But Jamie Dimon, chairman and chief executive of JPMorgan Chase, added a note of caution: Things were going so well, he said,
that “I promise you, we are going to be sitting here in a year and you all will be worrying about inflation and wages going up too high.”
That optimism may be an economic contra-indicator.
Despite a steady drumbeat of optimism about the economy from top business executives — and rightly so, given the record results they’ve been producing and expect to produce over the next year — some investors have been quietly suggesting
that the market was starting to look expensive when factoring in the likelihood of inflation.
“With the global economy rebounding and resource utilization tightening, we are carefully positioning for the possibility
that inflation surprises to the upside,” Ken Griffin, a co-founder of the Chicago hedge fund Citadel, wrote in a note to his investors last week.
That, he added, “is triggering interest rate increases that are hitting the brakes, first in the markets and later in the economy.”
Before all the pundits pass out from hyperventilating over the market “correction” —
and quick fact-check: technically a correction is defined as a drop of 10 percent or more — let’s take a deep breath: The market’s fall may seem precipitous, but it has dipped only 8.5 percent from the top.
But, in truth, it’s as if we had turned back the clock to where the stock market was in the middle
of December, when investors — and, yes, the president — were proudly cheering its success.
It is quite the opposite: Investors believe his policies to stoke growth are going to work so well
that they will overheat the economy, and force the Federal Reserve to try to slow things down by raising interest rates faster than expected.
But Jamie Dimon, chairman and chief executive of JPMorgan Chase, added a note of caution: Things were going so well, he said,
that “I promise you, we are going to be sitting here in a year and you all will be worrying about inflation and wages going up too high.”
That optimism may be an economic contra-indicator.
Despite a steady drumbeat of optimism about the economy from top business executives — and rightly so, given the record results they’ve been producing and expect to produce over the next year — some investors have been quietly suggesting
that the market was starting to look expensive when factoring in the likelihood of inflation.
“With the global economy rebounding and resource utilization tightening, we are carefully positioning for the possibility
that inflation surprises to the upside,” Ken Griffin, a co-founder of the Chicago hedge fund Citadel, wrote in a note to his investors last week.
That, he added, “is triggering interest rate increases that are hitting the brakes, first in the markets and later in the economy.”
Before all the pundits pass out from hyperventilating over the market “correction” —
and quick fact-check: technically a correction is defined as a drop of 10 percent or more — let’s take a deep breath: The market’s fall may seem precipitous, but it has dipped only 8.5 percent from the top.
But, in truth, it’s as if we had turned back the clock to where the stock market was in the middle
of December, when investors — and, yes, the president — were proudly cheering its success.
It is quite the opposite: Investors believe his policies to stoke growth are going to work so well
that they will overheat the economy, and force the Federal Reserve to try to slow things down by raising interest rates faster than expected.