I was sitting in a Washington, D.C., hotel room for the start of bank earnings last Friday morning, a.k.a. the official beginning of earnings season.
I had my normal earnings day routine in full effect: Three large iced coffees nearby, a digital notebook, a pair of headphones, soft-to-the-touch Lululemon clothing, and a story template open and ready to rock.
There were three things I wanted to learn from the big banks: 1) charge-off trends (we cover a lot of retail names here at Yahoo Finance), 2) the state of the deal market, and 3) commentary around Wall Street hiring trends.
I proceeded to open up the JPMorgan earnings release. Per usual, I combed through the numbers along the left rail of the first page. Then, per usual, I focused on the box on the bottom right of the page for the latest commentary from its CEO Jamie Dimon.
This comment from Dimon immediately popped out: “This may be the most dangerous time the world has seen in decades.”
“Wow, that is pretty intense from Jamie,” I said to myself. “Never heard that tone from him before — what does it mean to the average investor?”
With that comment right there from Dimon, the complexion of this earnings season has dramatically changed. The approach to investing in the market has changed into year-end, I think.
One sentence by the most powerful CEO in the game today. And when he says something like that it warrants a new way of thinking by investors.
Dimon followed up on this thread on the earnings call: “My caution is that we are facing so many uncertainties out there, you just got to be very cautious.” He added he is concerned about government debt levels and inflation, two topics he has focused on in various venues in recent months.
You may be asking yourself why, several days later, I am still harping on these comments.
Here’s why.
The most powerful CEO in the world with the biggest network and the best information is using all of that to put forth guidance to his various stakeholders and followers. Dimon in no way takes making a statement like that lightly. He knows the gravity of his words.
But then, in reality, Dimon is quite correct in his assessment.
The Israel-Hamas war continues to play out on a grand stage worldwide, injecting fresh geopolitical uncertainties. The Ukraine-Russia war rages. All of this has ties back to China and resurfaces our contentious relationship with that country.
The US House of Representatives is a flat-out mess that is making the country look bad again.
There is still a chance of a mid-November government shutdown. Inflation is stubborn and rate hikes continue to permeate the economy. Government debt levels are crazy and getting crazier.
Now if you follow the Warren Buffett style of investing, then none of this stuff matters. You buy stocks deemed attractively valued and shuffle along for the next 75 years drinking Coca-Cola.
Not everyone subscribes to that approach, though, and many are trying to live for today by investing in the markets or other assets. To that end, it feels appropriate to have more caution on asset allocation in the near term until some of the aforementioned issues cool down. Besides, stock valuations aren’t exactly cheap.
It often pays to listen to smart people in investing, and Dimon is obviously one of the smartest people in the room.
In case you were wondering, I got my charge-off answer.
On JPM’s media call, CFO Jeremy Barnum (another smart exec) told me he isn’t seeing “acute pain” in consumers from higher interest rates. It was a fair response but I think one that suggests those retailers we follow here at Yahoo Finance will report tepid third quarter results.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
