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JPMorgan built a unit for its hit list of ultra-wealthy families. The buy in? If you have to ask what the unlisted price is, you didn’t make the list.

But there’s plenty left on the list of economic events this week.

Let’s dive in.

Economy Heat Check

As of 6/21/2023 market close, unless otherwise stated.

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Expectations Reset

Powell Testifies Before US House

Core inflation is the core story from Powell’s House hearing yesterday. Core inflation has been stable at 5% annualized over the last 6 months. That’s too high. And that’s really all you missed.

For more, core inflation is far too high in Fed Chair Powell’s mandate. The Fed, as Powell restated, is likely to raise interest rates in the coming months. But, at a slightly slower pace than previously expected, given inflation and economic activity have not slowed as much as anticipated.

The Fed left rates unchanged last week after implementing 10 consecutive rate hikes to combat inflation. Powell emphasized yesterday that the recent decision shouldn’t be taken as a hint that the Fed is finished raising rates. Progress – to Powell – has been made. Now it’s all about everything in moderation.

Powell likened the Fed's current action to a driver slowing down after leaving the highway to avoid missing their intended destination. The Fed's current strategy is to evaluate the incoming data and make decisions on a meeting-by-meeting basis. Like Powell has said in every public questioning this past year.

Investors currently predict a 75% probability of a rate hike next month. Not if some Fed officials have something to say about it. Chicago Fed President Austan Goolsbee mentioned the difficulty of discerning the path ahead, while Atlanta Fed President Raphael Bostic expressed readiness to maintain steady rates for the rest of the year.

BOE Battles Inflation

UK inflation is stickier than a Brit on his lads trip to Ibiza. Now, all eyes are on the Bank of England’s (BOE) interest-rate decision this morning amid concerns about its rising inflation.

Wednesday's inflation report revealed that in May, UK consumer prices rose by 8.7% compared to the previous year, surpassing the inflation rates in the US (4%) and the eurozone (6.1%). The UK’s core inflation rate, excluding volatile items like energy and food, reached 7.1%.

Unlike in the US and the eurozone, core inflation rates in the UK are continuing to rise. It could signal a trend that indicates a potentially larger inflation problem for the country. Expect a challenging battle against inflation for the BOE, with futures markets indicating expectations of rates nearing 6% by December. That’s higher than the anticipated 5.25% in the US and close to the 4% forecast for the European Central Bank (ECB).

Inflation’s persistence has now led analysts to speculate whether the BOE may opt for a larger interest rate increase than previously anticipated. While a 0.25-percentage point hike was initially expected, the odds are tilting more towards British central bankers pushing for a 0.5-percentage point hike.

Global Money Flocks to India

Elon’s Starlink sank this week so India could swim. To the top of the Asian leaderboard for carry returns in 2023, that is.

Indian Prime Minister Narendra Modi's just jet-set to the US, but his meeting featured the business and financial titans, respectively, of yesterday: Elon Musk and Ray Dalio. Guess investors asking ChatGPT to summarize the minutes of their discussions were using the free pre-2021 version. Because the meetings sparked a surge in international investments flowing into India.

Modi’s engagements while in America have sent India's global appeal to investors skyrocketing. Looks like all it took was leaving the country on a PR tour to send global investment flooding in. Modi's discussions with Musk centered around electric vehicles and renewable energy, leading to Tesla's decision to expand its operations in India. The development instilled enough confidence in investors to turn bullish on India's renewable energy sector. Modi's chat with Ray Dalio seemed to be the final sign off for investment interest in the country.

India’s investment image has undergone a facelift to become a solid right swipe. More, Modi’s coffee chats delivered potentially valuable partnerships and collaborations in crucial sectors like technology and renewable energy. It’s a trend that signifies a growing recognition of India's potential for economic growth, and its emergence as a key player in the global investment landscape.

Still to Come: Global Flash PMIs

Flash Manufacturing, Services and Composite PMIs drop across the globe Friday. And investors are hoping data will drop the odds of a technical recession. The roster includes the US, the Eurozone, the UK and Japan. Each is part of the puzzle to determine the health of the global economy.

Before squinting too much at the Flash Services PMI, it’s worth recognizing that it's a poor quality measure in the US. It has a track record of being relatively unrelated to actual services demand in the US over its reporting history.

In the latest Philly Fed Non-Manufacturing Report, businesses in the region were asked about the degree to which they viewed various factors like labor markets, energy and supply chains as constraints on their activity over the next three months. As it turned out, far more view the situation for both labor and supply chains as improving as opposed to getting worse. So it wouldn't be surprising to see wage growth cool off – something the Fed wants to see – if firms feel less anxiety about getting caught short on labor.

As for Flash Manufacturing PMIs, the easing of the global freight markets continues to ripple. FedEx’s earnings earlier this week came in weak, in part because an easing shipping market has reduced pressure on fright. And they’re still blaming the pandemic, as businesses were swamped with packages and port congestion forced some shippers to send their wares by air freight.

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_{“Net Return" refers to the annualized internal rate of return net of all fees and costs, calculated from the offering closing date to the date the sale is consummated. IRR may not be indicative of Masterworks paintings not yet sold and past performance is not indicative of future results. See important Regulation A disclosures at masterworks.com/cd. B}