Wall Street CEOs stare down recession with upbeat outlook
Wall Street's two most outspoken CEOs said the U.S. is more than prepared to withstand an economic downturn.
JPMorgan Chase Chief Executive Officer Jamie Dimon and his Morgan Stanley counterpart, James Gorman, both said Thursday that they aren't steering their companies toward shelter even as they see a confluence of global events denting the economy in the months ahead.
“The consumer right now is in great shape,” Dimon said on a conference call discussing his company's second-quarter results. “So even if we go into a recession, they're entering that recession with less leverage and in far better shape than they did in '08 and '09.”
Gorman, on his bank's earnings call, said a deep or dramatic recession in the U.S. is unlikely, and Morgan Stanley is “long the U.S.” in most of its businesses. “The U.S. is a great region to be in the world.”
Those verdicts come even as secondquarter results at both JPMorgan and Morgan Stanley were hurt by a slowdown from the pandemic-era bonanza that gave them record revenue and profits.
Risks abound, with soaring inflation spurring central banks around the world to dial back the easy-money policies that had pushed markets to all-time highs. Russia's invasion of Ukraine, along with worries about food and energy security as well as political instability across regions, are also keeping investors on edge.
“If I had to use one word to describe it, it would be `complicated,' ” Gorman said on the challenges facing the global economy. He said that “Europe is fighting the hardest,” with the dual threat of the war in Ukraine and pressure on gas prices that's been particularly problematic for countries such as Germany.
Dimon, meanwhile, said his previous forecast for a looming economic “hurricane” hasn't changed, but that health of the American consumer offers a possible break in the clouds.
Solid economy can handle rising rates, Fed president says
The U.S. economy is healthy and shows little sign of an imminent recession, and can withstand higher interest rates, St. Louis Federal Reserve President James Bullard said Monday.
Financial markets are flashing signs that an economic downturn could arrive sometime next year, as Americans grapple with the highest inflation in four decades and the Federal Reserve pushes borrowing costs higher. But Bullard said in an interview with The Associated Press that the central bank wouldn't have to drive the economy into a recession or significantly raise unemployment to bring inflation down to its 2% target.
“Now we have lots of inflation, but the question is, can we get (inflation) back to 2% without disrupting the economy? I think we can,” he said.
Mexico agrees to invest $1.5B in `smart' border technology
Mexican President Andrés Manuel López Obrador agreed to spend $1.5 billion to improve “smart” border technology during meetings Tuesday with President Joe Biden — a move the White House says shows neighborly cooperation succeeding where Donald Trump administration vows to wall off the border and have Mexico pay for it could not.
A person familiar with a series of agreements the two countries hammered out as their leaders met in Washington said they also called for other things like expanding the number of work visas the U.S. issues and welcoming more refugees. They also would continue joint patrols for Mexico and Guatemala to hunt human smugglers along their shared border.
The agreements came hours after the meetings began with López Obrador offering more than half an hour's worth of comments. He touched on everything from Americans heading south for cheaper prices at the pump at Mexican gas stations to the New Deal politics of Franklin Delano Roosevelt, while chiding conservatives and saying the U.S. and Mexico should reject the “status quo” on the border.
López Obrador said both countries “should close ranks to help each other” amid spiking inflation and border challenges brutally underscored by 53 migrants who died last month after being abandoned in a sweltering tractor-trailer on a remote back road in San Antonio.