Latest news with #Feroli
Business Insider
2 days ago
- Business
- Business Insider
JPMorgan Chase (JPM) Now Expects Three Rate Cuts from the Fed in 2025
The top economist at JPMorgan Chase (JPM) now expects the U.S. Federal Reserve to cut interest rates three times in 2025, starting with a 25-basis-point reduction in September. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. The new outlook on interest rates comes after U.S. President Donald Trump nominated Stephen Miran, Chair of the Council of Economic Advisers, to fill a vacant seat on the Fed's board of governors. Michael Feroli, JPMorgan's chief U.S. economist, previously forecast only one rate cut this year, in December. However, Feroli now expects the central bank to start cutting rates in September, and to do so again at each of the Fed's subsequent three meetings in October, December, and January 2026. Trump's Fed The Federal Reserve lowered interest rates by one full percentage point in the second half of 2024 but has been on the sidelines ever since, citing economic uncertainty as a need to be cautious on rates. Fed Chair Jerome Powell has repeatedly said that the central bank is waiting to assess the impact of President Trump's tariffs on inflation before acting. This approach has not sat well with President Trump, who has repeatedly criticized Powell and threatened to fire him before his term ends in May 2026. The president has also said he wants to remake the Fed in his own image and appoint a political loyalist to be the next central bank governor. JPMorgan's Feroli said this all begins with President Trump's decision to pick Miran to fill a recently vacated seat on the Fed's board. Let's look at the performance of the SPDR S&P 500 ETF Trust (SPY), which tracks the benchmark U.S. stock index. As one can see in the chart below, the S&P 500 has gained 9% this year.
Yahoo
14-05-2025
- Business
- Yahoo
JPMorgan lowers recession probability after Trump's tariff truce with China
JPMorgan trimmed its forecast for the probability of the U.S. economy entering a recession this year after President Donald Trump reached a deal to temporarily lower the tariffs he imposed on imported goods from China. The president announced Monday that a deal has been reached to lower the "reciprocal" tariffs he imposed to lower the overall tariff rate on Chinese goods from 145% to 30% for 90 days while negotiators work to finalize a longer-term agreement. The Chinese government, in turn, reduced its retaliatory tariffs on U.S. goods from 125% to 20% for the 90-day period. "The administration's recent dialing down of some of the more draconian tariffs placed on China should reduce the risk that the U.S. economy slips into recession this year," wrote Michael Feroli, chief U.S. economist at JPMorgan. "Conditioned on current rates prevailing indefinitely, we are now projecting real GDP growth for this year at 0.6% (4Q/4Q), up from 0.2% before the latest tariff news." "We believe recession risks are still added, but now below 50%," Feroli noted. The firm's prior forecast put the risk of a recession this year at 60% in the days after the Trump administration's "reciprocal" tariff announcement. White House Slashes 'De Minimis' Tariffs On China To 54% JPMorgan's analysis projected that the personal consumption expenditure (PCE) index — the Federal Reserve's preferred inflation gauge — will be 3.5% at the end of this year, lower than the estimate of 4% before the tariff pause, but higher than the 2.2% projection from the start of the year. Read On The Fox Business App A PCE reading of 3.5% would be well above the Fed's inflation target of 2%, making it more likely the Fed would delay interest rate cuts unless the labor market starts to deteriorate. The unemployment rate was 4.2% in April, and JPMorgan projects the unemployment rate will peak at 4.8% in the second quarter of 2026. China Criticizes Us-uk Trade Deal, Says It's 'Basic Principle' Not To Target Other Countries: Report "We still project a modest contraction in employment later this year, as labor demand is projected to slow even more than labor supply," Feroli wrote. "Our updated labor market outlook is less demanding of immediate action to stem employment risks; for the Fed, we are pushing back the timing of the resumption of rate cuts from September to December." He added that the bank sees three further sequential rate cuts after December, which would lower the target range for the benchmark federal funds rate to a range of 3.25% to 3.5% by the second quarter of 2026. Trump Says China Deal Will Open Up Market For Us Businesses The report noted that the changes to tariffs on Chinese goods lowered the average effective tariff rate from around 24% to about 14%, a notable reduction though it remains well above the 2.3% effective tariff rate that prevailed in 2024. "A tariff is a tax, and so relative to prior assumptions this can be seen as a tax cut of almost $300 billion," Feroli wrote. "Most of that tax was likely to have been borne by U.S. consumers in the form of higher prices." "The rolling back of this tax should provide some relief to consumer spending, and in our modeling is enough to tip the second-half growth outlook from one of modest contraction to one of modest growth," he article source: JPMorgan lowers recession probability after Trump's tariff truce with China
Yahoo
14-05-2025
- Business
- Yahoo
The China tariff pause has Wall Street scaling back recession calls
Trump's latest tariff pause has Wall Street reeling back its recession calls. Discussion of an economic downturn later in 2025 had surged as economists argued Trump's widespread tariffs would boost inflation and slow economic growth. Now, with the bulk of tariffs on goods from China paused for 90 days — and optimism around further trade deals building — economists argue that economic growth will still slow later this year, but the odds of a recession have diminished. "The administration's recent dialing down of some of the more draconian tariffs placed on China should reduce the risk that the US economy slips into recession this year," wrote JPMorgan chief US economist Michael Feroli, who had been the first Wall Street economist to call for a recession after Trump's large tariff increase. "We believe recession risks are still elevated, but now below 50%." Feroli's logic is simple: Tariffs are essentially a tax. With the latest tariff cuts, the estimated effective US tariff rate has fallen from roughly 24% to 14%. This creates a $300 billion "tax cut" for American consumers that likely would've been swallowing the brunt of the price increases caused by tariffs. Americans paying higher prices and eventually being unable to spend as much was a key part of why economists have been worried about tariffs leading to an economic slowdown. Read more: The latest news and updates on Trump's tariffs "The rolling back of this tax should provide some relief to consumer spending, and in our modeling is enough to tip the second-half growth outlook from one of modest contraction to one of modest growth," Feroli wrote. Feroli isn't alone in believing recession odds are diminishing as the US scales back its tariff escalation. Both Yardeni Research and Goldman Sachs have also lowered their recession odds in reaction to the US pausing the bulk of its tariffs on Chinese goods. Goldman Sachs' economics team moved its recession probability for the next 12 months down to 35% from a prior forecast of 45% while boosting its GDP forecast to 1% growth for the year, higher than a prior forecast of 0.5%. Read more: What is a recession, and how does it impact you? Yardeni, meanwhile, now sees 2025 GDP in a range of 1.5% to 2.5%, up from a prior projection in the 0.5% to 1.5% range. Barclays' economics team, which had previously called for a recession, removed its call for an economic downturn in a note to clients on Tuesday. "We think these lower tariff rates on China will be considerably less disruptive for domestic activity, labor markets, and less inflationary, than prior rates," Barclays chief US economist Marc Giannoni wrote. Giannoni pointed to how the tariffs on Chinese goods had already led to slower inbound cargo shipments into the US. Economists had cited this as one potential catalyst for the start of a recession, as slower shipments would eventually lead to lower inventory and higher prices for goods. That cycle would lead to consumers buying fewer goods and, eventually, companies being forced to cut employees as their sales slow. The increased likelihood of an eventual lower tariff rate on Chinese goods mitigates this risk. To be sure, economic forecasts are just that — forecasts. And while the likelihood of a downturn has shifted, risks remain for a US economy that already features a cooling labor market and is expected to see rising inflation later this year. Still, the more sanguine economic forecasts have provided a boost for stocks. In the initial reaction to Trump's "Liberation Day" tariffs on April 2, skyrocketing odds of a recession spooked more than 10 Wall Street strategists to slash their year-end target for the S&P 500 (^GSPC). Read more: How to protect your money during turmoil, stock market volatility Now the same trend has been happening in reverse. Yardeni Research President Ed Yardeni pointed out in a Monday night to clients that the odds of a recession on popular online betting platform Polymarket have tumbled from 51% last Friday to less than 40% after Trump's China tariff delay. In that same note to clients, Yardeni boosted his year-end target for the S&P 500 from 6,000 to 6,500. The Goldman Sachs equity strategy team made a similar move, now forecasting the benchmark index to end the year at 6,100, up from a prior call for 5,900. "We raise our S&P 500 return and earnings forecasts to incorporate lower tariff rates, better economic growth, and less recession risk than we previously expected," Goldman Sachs chief US equity strategist David Kostin wrote in a note to clients. Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
22-04-2025
- Business
- Yahoo
US stock futures rise after sliding Monday
U.S. stock futures point to a higher open after sliding on Monday as investors grow more nervous about tariff fallout and now, also whether the Federal Reserve is safe from politics. At 5:40 a.m. ET, blue-chip Dow futures rose 0.88%, broad S&P 500 futures added 1.01%, and tech-heavy Nasdaq gained 1.04%. President Donald Trump has ratcheted up criticism of Fed Chair Jerome Powell in the last week. The latest blow came Monday when he called Powell a "loser" and demanded again the Fed cut rates "NOW." Without rate cuts, he said the economy would slow. The remarks come after hints that the administration was looking at ways to fire Powell. Powell has said he will serve out his term, which ends in May 2026. All the Fed talk added to already frayed nerves from tariffs. "Any reduction in the independence of the Fed would add upside risks to an inflation outlook that is already subject to upward pressures from tariffs and somewhat elevated inflation expectations," said Michael Feroli, chief U.S. economist at JPMorgan. Executives from Walmart, Home Depot and Target nervous about tariffs were among those who met with the White House on Monday afternoon to discuss tariff exemptions. Meanwhile, China warned it would retaliate against countries that aligned themselves with the U.S. in isolating China, and South Korea customs data showed exports fell sharply in the first 20 days of April due to tariffs. "A multi-front trade war is by itself a lot for stocks to handle so adding a Fed independence crisis on top of it has markets understandably jittery," said Jeff Buchbinder, chief equity strategist for LPL Financial. The administration fired two members of independent agencies, the National Labor Relations Board (NLRB) and the Merit Systems Protection Board (MSPB). A lower court has ruled those firings unlawful, the administration appealed, and the Supreme Court has decided to hear the appeal. Feroli sees three possible outcomes: the Supreme Court could rule in favor od the administration; rule in favor of the administration in the NLRB and MSPB cases, but consider the Federal Reserve as a separate case, possibly to the benefit of Fed governors; or rule against the administration that could save Powell's job. However, Feroli notes that even the last option doesn't guarantee Powell's job is safe. "There is a separate question as to whether the administration can demote a governor from their leadership position as either Chair or Vice Chair," he said. "Unlike governors, the Federal Reserve Act does not explicitly give 'for cause' protection to leadership positions, though no administration has ever sought to demote someone from such a role." One of the main events on Tuesday is Tesla's quarterly earnings report, due after the market closes. Meantime, some companies that reported after Monday's market close include: BOK Finanial reported earnings per share in the latest quarter that missed analysts' forecasts. Calix topped analysts' earnings forecasts in the first three months of the year and expects the current quarter to be strong. Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@ and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday. This article originally appeared on USA TODAY: US stock futures rise after sliding Monday
Yahoo
11-04-2025
- Business
- Yahoo
Seeing red again: Stocks plummet after White House says China tariffs are actually 145%
US stocks plummeted on Thursday, with the Dow down as much as 2,181 points and the Nasdaq down as much as 7%. Investors focused on tariffs against China, with the White House saying the rate was 145%. The bond market is also a concern for investors as Treasury yields remain elevated. Stocks are seeing red again. After Wednesday's historic gain, US indexes were back in sell-off mode on Thursday, with the Dow Jones Industrial Average shedding 2,181 points at its intraday low before paring gains ahead of the close. The volatile trading swings had other indexes also experiencing whiplash. The S&P 500 fell as much as 6% before paring those losses to 3%, while the Nasdaq-100 plunged as much as 7% before paring its losses to about 4%. Here's where indexes stood at the 4 p.m. ET. closing bell on Thursday: S&P 500: 5,268.05, down 3.5%. Dow Jones Industrial Average: 39,603.80, down 2.5% (down 1,005 points). Nasdaq composite: 16,387.31, down 4.3%. Despite President Donald Trump's 90-day pause of reciprocal tariffs, which offers a reprieve from the trade war, investors are still focused on the high tariff rate on goods from China. Tech led the market lower shortly before midday, with many of Wednesday's highfliers tumbling sharply. This embedded content is not available in your region. As of 4:00 p.m. The White House said on Thursday that the total combined tariff rate for China — initially thought to be 125% — was 145%. Meanwhile, a 10% universal tariff still applies to most countries. Bond yields also reversed course after dropping earlier in the day. The 10-year Treasury yield was up about six basis points to 4.41%. Here were some other big moves in markets on Thursday: The Volatility Index (VIX): +19.54%, up more than 50% at its high The US dollar index: down 1.70% WTI Crude Oil: down 3.18% Gold: +3.68% The bond market turmoil and a steep run-up in yields appeared to help push the president to pause most tariffs. The sharp decline on Thursday came after the S&P 500 saw one of its biggest daily gains ever, rising nearly 10% after Trump delayed his reciprocal tariffs for most countries for 90 days. But the pause was not enough to erase fears over the deepening trade conflict with China. An analysis by JPMorgan found the average effective tariff rate increased on Wednesday despite the 90-day delay, driven by the sky-high tariffs on China. "In static terms, today's moves would actually increase the average effective tariff rate from 23% to 25%," the JPMorgan economist Michael Feroli said in a Wednesday note. Feroli's analysis was based on the assumption that China's tariff rate was 125%, not 145%, meaning the effective tariff rate is even higher than JPMorgan's estimate. While a recession is "a closer call," Feroli said, a contraction in economic growth remains highly likely. Other commentators on Thursday were similarly unconvinced that the tariff pause would do much to boost stocks. The Wharton School's Jeremy Siegel said that the market events over the past week had shaken consumers and investors, while the escalation of China tariffs is a major obstacle. "The shock of what happened, I don't think you can get that out of consumers' minds or investors' minds for quite a while," Siegel told CNBC on Thursday morning. Read the original article on Business Insider
