Latest news with #Kasman
Reuters
04-04-2025
- Business
- Reuters
J.P.Morgan lifts global recession odds to 60% as US tariffs stoke fears
April 4 (Reuters) - The risk of a U.S. and global recession this year have risen to 60% from 40% earlier on the heels of President Donald Trump's sweeping reciprocal tariffs, Wall Street brokerage J.P. Morgan said. On Wednesday, Trump imposed a 10% baseline tariff on all imports to the U.S. and higher duties on dozens of other countries. The Reuters Tariff Watch newsletter is your daily guide to the latest global trade and tariff news. Sign up here. "Disruptive US policies has been recognized as the biggest risk to the global outlook all year," J.P. Morgan strategists, led by Bruce Kasman, said in a note on Thursday, adding that US trade policy has turned less business-friendly than anticipated. "The effect of this tax hike is likely to be magnified through retaliation, a slide in US business sentiment, and supply chain disruptions," Kasman said. Other Wall Street brokerages, including Barclays and Deutsche Bank, also warned that the U.S. economy faces a higher risk of slipping into a recession this year if Trump's new levies remain in place. However, Kasman expects the shock of the tariffs to be "modestly dampened" by the prospect of further rate cuts in the U.S. reiterated its forecast of two 25-basis point rate reductions by the Federal Reserve in June and September this year, while investors expect a total of four rate cuts in 2025, per data compiled by LSEG.
Zawya
14-03-2025
- Business
- Zawya
Exorbitant disruption risks undermining US 'privilege': Mike Dolan
LONDON - There's something more than U.S. tariffs and recession risks gnawing at financial markets. There's the growing sense that the chaotic policy disruption in Washington is eroding the world's trust in U.S. institutions and its assets. Broken political alliances and economic wars with major trade partners are having many effects - not least heightened business uncertainty over what will happen next - but one of the most notable is the brewing investor concern that America could lose a chunk of its "exorbitant privilege". This term, first coined in the 1960s by then French finance minister Valéry Giscard d'Estaing, essentially refers to the benefits the U.S. gains from the outsize demand the world has for U.S. assets as a safe haven. The privilege hinges variously on the extensive use of the dollar internationally, the U.S. rule of law and institutional rigor as well as the projection of its soft power. The list is much longer than that, but you get the picture. The sheer size, depth and transparency of U.S. markets, in combination with the reliability and openness of its governance, have - for decades - given the U.S. a disproportionate slice of world capital and the cheaper financing that goes with that. Could Donald Trump's avowedly disruptive administration call all that into question and whittle this advantage away? Financing metrics, such as long-term U.S. borrowing costs, don't yet suggest that a major fracture is afoot. But U.S. equity prices have started to correct over the past month, even as the dollar has weakened - an ominous combination. Ultimately, though, the very fact that trust - or the lack thereof - is part of the U.S. conversation at all is the most remarkable thing. On Wednesday, JPMorgan's chief global economist Bruce Kasman spoke openly about the challenges during a roadshow in Singapore. He opined about how the U.S. secured its "exorbitant privilege", citing many of the reasons noted above and including things like the "integrity of information flow". The administration's cutbacks to government agencies and moves to disband the advisory committees assisting with data collection are also potentially jarring, he said. "All of those things are part of the uncertainties that have moved into U.S. policy, and that (form) part of the risk in the outlook this year I don't think has been appreciated." 'EXORBITANT BURDEN'? Referring to exorbitant privilege, Kasman added: "The risk that stuff starts to come under pressure and becomes a structural issue in the markets is not something I would, by any means, underplay." This is likely what investors and strategists both within the United States and around the world have been thinking for weeks - even if relatively few have verbalized it. And Kasman is not alone in saying something. Writing about speculation surrounding the prospect of a "Mar-a-Lago Accord" to correct U.S. deficits and global imbalances, former Reserve Bank of India governor Raghuram Rajan questioned the diagnosis of Trump adviser Stephen Miran and said it was dangerous for America to play around with its exorbitant privilege. Rajan expressed doubt that reforming U.S. macroeconomic policy would somehow deter overseas savers from the U.S., thereby weakening an overvalued dollar or helping to cut U.S. deficits. "It is not clear where the Trump administration's current path of 'shock and awe' is supposed to lead," the former International Monetary Fund chief economist wrote in Project Syndicate this week. "The claim that the dollar's attractiveness is an exorbitant burden rather than an exorbitant privilege is unpersuasive, especially when those making such arguments are so reluctant to give up the burden," he said, referring to the administration's regular support for the dollar's global status while promoting policies that undermine it. "Markets are unnerved by the punishment that the administration, convinced that the U.S. is a victim, is willing to inflict on close allies," he concluded. "If such behavior reduces the attractiveness of the dollar, perhaps it really will become an exorbitant burden. But that is not a future that any American should want." It's good to remember that foreign holdings of U.S. financial assets nearly doubled over the past decade to some $60 trillion before the recent market ructions. Given the scale of this cross-border money, if faith in the U.S. truly is shaken, the outcome could make the year's market shakeout to date seem very small indeed. The opinions expressed here are those of the author, a columnist for Reuters (By Mike Dolan; Editing by Lisa Shumaker)
Russia Today
12-03-2025
- Business
- Russia Today
JPMorgan sounds US recession alarm
US President Donald Trump's trade policies could dent the country's economic growth and raise the risk of a recession this year, JPMorgan has warned. The investment bank's chief global economist, Bruce Kasman, told reporters in Singapore on Wednesday there is about a 40% chance of a US recession in 2025. He cautioned that if Trump's proposed reciprocal tariffs on key trading partners take effect in April, the risk could rise further and hurt the country's appeal as a place for investment. 'Where we stand now is with a heightened concern about the US economy,' Kasman said, adding he had not yet adjusted any of his forecasts. At the start of the year, Kasman initially estimated a 30% recession risk, but this has since risen to 40% and could exceed 50% if tariffs take full effect, he said. JP Morgan currently forecasts the US economy to grow by 2% for 2025, but the projection has yet to be revised. Economists at Goldman Sachs and Morgan Stanley have lowered their growth projections to 1.7% and 1.5%, respectively, for this year. Trump's sweeping tariff measures have rattled US stock markets, as investors struggle to determine whether the levies are permanent or a negotiating tactic. In February, Trump announced plans to impose tariffs on key trading partners in order to protect American interests. Last week, he raised tariffs on all imports from Mexico and Canada to 25% and doubled duties on all Chinese goods to 20%, before delaying some increases until April 2. Trump has threatened to impose a global regime of reciprocal tariffs, warning that from April 2, every country will face the same levy it imposes on US goods. A 25% tariff on imports of steel and aluminum took effect on Wednesday, and the EU and Canada responded with reciprocal tariffs. When asked by Fox News in an interview that aired on Sunday whether the US was facing a recession, Trump said it was a transition period, adding, 'We're bringing wealth back to America.'
