Soft Landing or Hard? Bank Results Show Path to No Landing
Comments from JPMorgan and Wells Fargo suggest the economy could stay airborne
By Telis Demos, The Wall Street Journal, Oct. 12, 2024
Economists, investors and business leaders have been debating for months whether the economy is headed for a soft landing or a hard landing. But there is a third option: no landing at all.
Rather than the economy slowing gradually or rapidly, it might actually be poised to keep growing as it is, at a moderate or better pace…
JPMorgan Chief Financial Officer Jeremy Barnum said, “So overall, we see the spending patterns as being sort of solid and consistent with the narrative that the consumer is on solid footing, and consistent with the strong labor market and the current central case of a kind of no-landing scenario economically.”… [end quote]
The Atlanta Fed’s GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2024 was 3.2 percent on October 9. Their estimate has been gradually rising. This is a brisk but probably sustainable growth rate.
Combined with the inflation rate which has declined but is not yet down to the Fed’s target of 2% the options market has responded by predicting two 0.25% cuts in the fed funds rate by the end of 2024.
The stock market continues to rise. The trade is risk-on since stock and junk bond prices are rising faster than the price of Treasuries. The Fear & Greed Index is in Greed. The CAPE bubble continues to inflate.
The Treasury yield curve has risen in the past week. Oil, copper and natgas dropped a little from their recent highs. Financial conditions are loose and getting looser in the money markets, debt and equity markets, and the traditional and “shadow” banking systems.
The METAR for next week is sunny.
Wendy