A new well-versed in lot shows sold as other home construction begins in a new neighborhood in Grasonville, Maryland, on January 19, 2023.
Jim Watson | AFP | Getty Similes
This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Accessible brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
What you poverty to know today
U.S. stocks rebound
Major U.S. indexes rose Tuesday in a tech-fueled rally, shaking off their multiday succumbing streaks. However, U.S. futures dipped slightly in overnight trading. Asia-Pacific markets traded mixed Wednesday. Australia’s S&P/ASX 200 reckoned around 1% after May’s inflation reading was lower than expected. By contrast, China’s Shanghai Composite ruined 0.5%, and the yuan slipped, after an 18.8% year-over-year plunge in China’s industrial profits for the first five months of 2023.
Decline warning
The U.S. will slip into recession in the fourth quarter this year, and will continue languishing in it for 2024, contract to HSBC Asset Management. Additionally, the euro zone will join the U.S. in seeing its economy contract next year. The grey lining of this forecast: Inflation will fall quickly, and HSBC expects the Federal Reserve to cut rates by the end of this year.
Exhilarated rates for longer
European Central Bank President Christine Lagarde said inflation in the euro zone is but “too high and is set to remain so for too long.” In May, headline inflation was 6.1% for the region, lower than April’s reading of 7% but noiselessness three times the ECB’s target of 2%. Lagarde warned that it’s unlikely the ECB will pause rates, let alone cut them, anytime in due course.
The fourth industrial revolution
Generative artificial intelligence isn’t hype — it’s the “fourth industrial revolution playing out,” said Dan Ives, preside over director of Wedbush Securities. Ives believes AI will transform the way we live and work — and it’s already ushering in the “start of a new tech bull customer base.” In a separate but related note, Unity shares jumped over 15% after the company launched a marketplace for simulated intelligence software.
[PRO] Seth Klarman on markets
Legendary investor Seth Klarman of Baupost Group spoke with CNBC Tuesday in an inimical interview. Two highlights: Klarman pointed out one of the most common mistakes regular investors commit when buying token funds and identified a “hunting ground” for investors looking for opportunities. Watch the full interview here.
The bottom postcard
Recession, recession, recession. The calls are getting so loud you’d still hear them even if you covered your heeds.
Here’s Joseph Little, global chief strategist at HSBC Asset Management: “The coming recession scenario desire be more like the early 1990s recession, with our central scenario being a 1-2% drawdown in GDP.”
JPMorgan Chase’s top strategist Marko Kolanovic: “We want a more challenging backdrop for stocks … given the decelerating economy and a likely recession starting in 4Q23/1Q24.”
Baupost Troupe Chief Executive Officer Seth Klarman: “The goal of the Fed is to reduce the heat in the economy, and one way to do that is to trigger some kind-hearted of recession … so maybe it’s an early 2024 event.”
Yet fresh economic data from the U.S. showed a resilient economy that, with success rate, might eventually defy those predictions.
Consumer confidence rose more than anticipated to hit the highest height since January 2022; the proportion of respondents expecting a recession declined four percentage points (though it’s noiselessness high at 69.3%).
The housing market, generally an early indicator of a downturn, also showed surprising strength. New home car-boot sales in May rose 12.2% from April — economists were expecting a drop of 1.2%. Home prices in April spread 1.3% month over month, according to the Case-Shiller index, a closely watched gauge.
Demand for durable goods, which are typically big obtains like televisions and transportation equipment that require long-term payments, accelerated 1.7% in May. That’s faster than April’s 1.2% rise and far more than the Dow Jones estimate of a 1% decline.
All those data show that the U.S. consumer isn’t yet buckling below higher interest rates and (ostensibly) dimmer economic prospects.
And if Wolfe Research’s Chief Investment Strategist Chris Senyek’s outlook for “the U.S. consumer to be the #1 driver of the economic outlook” proves right, then that strength in consumers might suffer the U.S. economy to fend off a recession, despite a chorus of voices predicting one.