MILANO – The risk of recession is officially on the table and the markets are taking note. Fed chairman Jerome Powell explicitly spoke of it as a “probability”, while stressing that the US economy is strong. And precisely for this reason it has strong enough shoulders to withstand vigorous rate hikes, necessary to hit the Fed’s number one goal: to put out inflation. But now the investment banks are increasingly reckoning with the possibility of an underwater economy: almost simultaneously, both the CEO of Deutsche Bank that analysts of Citigroup they indicated the possibility of seeing a recession in the near future in 50%. “The experience –
reads a note from the bank – it tells us that disinflation often entails significant costs for growth, and that the chances of recession are now approaching 50%. ” Goldman Sachs believes that the risks of recession are “higher and closer”.
“Powell finally gave up on soft landings, calling them ‘very challenging’, and instead stated that a recession is ‘certainly a possibility.’ This should have been enough to trigger a rally in risk appetite, a bit counterintuitive, given that Fed upside expectations have been scaled back; instead, we got a mixed response as Powell said quite firmly that the surge in inflation must be brought back to earth, “he commented in a statement. Jeffrey Halley, an analyst at Oanda. “This left the markets in a no-man’s land of sorts. US equities couldn’t wait to find an excuse to hit the buy button, as is in their genetically pre-programmed arrangement. But as Powell talked about possibilities. of recession and being “agile” from one FOMC meeting to another, the reality that a recession is probably not the best for stocks and has mitigated animal spirits. “
The day of the European stock exchanges, among these arguments, promises to be uncertain: futures on Wall Street are slightly down, after yesterday ended an unstable session with a slight decline (Dow at -0.16%).
Asian stock exchanges are proceeding mixed. Tokyo yields slightly and leaves 0.05% on the ground, Shanghai earns 0.67%, Shenzhen advances by 0.78%, a Hong Kong the price list rises by 1.36% while a Seoul gives up 0.71%.
Today and tomorrow will be held in Brussels on European Council which will address developments in the war in Ukraine and European support for Kiev; the humanitarian, food and energy effects of the conflict; aid to families and businesses hit by the crisis; the prospects for EU enlargement; the follow-up to the Conference on the future of Europe. Always today begins the vertice Brics, which will give Vladimir Putin the chance to take back the world stage. For the first time since the war in Ukraine, the leaders of Brazil, Russia, India, China and South Africa will meet in a virtual summit.