The 6-9 Jamie Dimon Missed

Let’s recap the week, but from the perspective of Jamie Dimon trying to distract from JPMorgan’s quarterly earnings. He started the week optimistic, with the outlook that “serious” headwinds are likely to push the U.S. and global economies into recession by the middle of next year. He then went after ESG, arguing "some investors don't give a shit about woke 'ESG' investing." Oh, he also banned Kanye from banking with them.

Let’s get up to speed on news attempted to be buried into the weekend and preview the week ahead. 

Bad News Dumpster Dive

​​The “Friday news dump" is alive and well. In the spirit of highlighting all the efforts of market movers to bury their news, we've decided to excavate them. Here are all the Friday and weekend dumps for your viewing pleasure:

Saturday (all EDT):

12:00 AM: Credit Suisse is preparing to sell parts of its Swiss domestic bank as it attempts to close a capital hole of around 4.5 billion Swiss francs (FT). 

7:45 AM: Goldman Sachs and BlackRock are among those warning that markets are yet to price in the risk of a global recession (Yahoo Finance).

8:22 AM: The stock market is in trouble because the bond market is “very close to a crash,” cites the Bear Traps Report founder (MarketWatch).

9:46 AM: German Chancellor Olaf Scholz called for an expanded European Union. In his perspective, gathering the European social democrats would enable them to better pull their weight in global affairs (Reuters).

11:30 AM: The European Central Bank reported last week that it was concerned about a potential wave of defaults on banks (Reuters).

12:04 PM: More than half of CEOs consider workforce reductions over the next 6 months — and remote workers may be the first to go (MarketWatch).

1:32 PM: Bank of America warned that the past two decades of low inflation and near-zero interest rates were an “aberration.” Get ready for an economic “regime change” (Fortune). 

2:04 PM: Billionaire Silicon Valley investor Peter Thiel is in the process of acquiring Maltese citizenship (NYT). 

2:07 PM: BMW plans to move its production of electric minis from the UK to China (Reuters). 

3:09 PM: The Fed's Bullard said he is “happy that the Fed 75 BPS rate hikes have not caused market turmoil” (Reuters). 

4:15 PM: Cathie Wood’s flagship fund on Friday closed at its lowest level in five years, after suffering a 78% plunge from last year’s highs (Bloomberg). 

5:05 PM: Home flippers are in trouble again due to the U.S. housing market’s sudden slump (Fortune). 

9:46 PM: Stanley Druckenmiller sees a “hard landing” in 2023 with a possible deeper recession than many expect (CNBC). 

10:33 PM: China reserves the right to use force over Taiwan as a last resort in compelling circumstances, though peaceful reunification is its first choice, a Communist Party spokesman said (Reuters).

10:42 PM: The Bank of Japan's Governor Kuroda announced that since Japan's headline inflation is likely to decline below 2% next fiscal year, they are continuing with monetary easing (Bloomberg). 

10:54 PM: China stepped up anti-COVID measures in megacities as infections mount (Reuters).

Friday (all EDT): 

1:30 AM: Europe is still quietly importing Russian nuclear energy (CNBC). 

3:50 AM: The FDA officially declared a nationwide shortage of Adderall (NPR). 

4:56 AM: Citibank warned that the dollar will peak only when the world economy “recovers” (FXStreet). 

5:58 AM: JPMorgan Chase topped Q3 estimates of its earnings. The bank said Q3 profits fell 17% from a year earlier to $9.74B ($3.12 a share, beating $2.88 analyst estimates). Its revenue for the quarter was $33.49 billion, exceeding analysts’ $32.1 billion estimate. Notably, it was willing to take $959 million in losses in order to sell off mortgage bonds (CNBC). 

7:44 AM: In its quarterly earnings call, Citibank CEO Jane Fraser disclosed that they “now expect to experience rolling country-level recessions starting this quarter.” She added that the U.S. might see a “mild recession” in the second half of 2023 (CNBC). 

8:20 AM: US Treasury Secretary Yellen is worried about the “loss of adequate liquidity” in the U.S. government bond market (MarketWatch). 

11:13 AM: JPMorgan CEO Jamie Dimon reiterated that while the bank is strong, the economy is still facing serious headwinds, including war in Ukraine, and the impacts of global central banks tightening monetary policy (Barron’s). 

4:13 PM: Cathie Wood says that “'We're in a recession right now” and it's going to get worse (Yahoo Finance). 

4:31 PM: Robert Murdoch is exploring recombining Fox Corp and News Corp after they were split a decade ago (WSJ). 

5:29 PM: Nikola founder Trevor Milton convicted of defrauding investors in his e-truck startup by a NY jury (Yahoo Finance). 

7:20 PM: The Pentagon is in talks with Elon Musk’s Starlink to keep connectivity for Ukrainian forces (NBC News). 

Market Outlook

News to know for the week ahead

Goldman Sachs and Bank of America gear up for their beginning-of-the-week earnings announcements. Wall Street is bracing for a rough earnings season as macroeconomic issues weigh on profit margins. But even if third-quarter results aren’t so bad, the bigger fear is what Corporate America sees on the horizon. Just last Friday, BofA's chief US strategist asserted that the "Big Low" in the market is coming, but there hasn't been enough macro/market pain yet. 

Tesla is preparing for a Wednesday earnings announcement about as rocky as Elon’s Twitter negotiations. The company already reported lower-than-expected Q3 deliveries earlier this month, which sent shares tumbling nearly 9%. Analysts, on average, forecast earnings of $1.00 per share for Tesla's third quarter, down 46.2% from Q3 2021. That being said, benefits include forex headwinds and the Inflation Reduction Act’s tax credits for electric vehicles.

Buyers will continue to speed out of the housing market. In July, the S&P Case-Shiller index, which measures house prices in 20 U.S. cities, recorded its first monthly decline in a decade, dropping by 0.44%. In August, the median house price in the U.S. was $356,054 according to Zillow. That was about $1,500 down from its all-time high in June. The fact of prices declining rather than rising is a watershed moment. Americans haven’t seen anything like this market environment since 2010 or 2011.

Initial jobless claims will be released this Thursday at 8:30 (EDT). The four-week moving average for jobless claims, which smooths out weekly volatility, rose to a seasonally adjusted 211,500 last week. The U.S. jobs market remains on strong footing, but has cooled in recent months. Employers added 263,000 jobs in September, the smallest monthly job gain this year, while the number of people in the labor force fell. Job openings, a proxy for labor demand, declined in August to their lowest levels in a year, while layoffs increased slightly that month.

The US Treasury market is suffering from declining liquidity and elevated volatility. Experts cite that the Fed’s next crisis is brewing in U.S. Treasuries. Following last week’s release of the consumer-price index report, the two-year Treasury note's yield closed the day at 4.45%. It was up from nearly 4.29% at Wednesday’s close. It hasn’t been that high since 2007. 

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